There are many, many Baby Boomers retiring or getting close to retiring, but with savings low and other investments not bringing in much to put toward retirement, boomers are looking for alternatives. Reverse mortgages are one solution they are starting to consider more than previously due to the large amount of equity in their homes, according to a recent article from U.S. News & World Report. Here are some Reverse Mortgage Facts that may come in handy.
A reverse mortgage can be used instead of a traditional home equity line of credit in certain cases and can be more flexible, because with a reverse mortgage the borrower has the option to repay the loan, Reverse Mortgage providers explain in the article.
There are different perspectives from various financial experts on how to use a reverse mortgage in retirement but there are some facts that everyone should be aware of before taking the leap into a reverse mortgage, U.S. News writes.
Many people are still using a reverse mortgage as a last resort as a way to stay in their home when they’ve run out of funds elsewhere.
“It makes sense if you need the money and have no other sources to stream it from. You have to take care of No. 1, that’s you,” Michael Foguth, founder of Foguth Financial Group in Brighton, Mich., said in the article.
Another thing that potential borrowers should be aware of is that interest rates and closing costs for reverse mortgages can be higher than a traditional 30-year fixed rate mortgage, the article explains. The percentages may actually be pretty close, but the amount the borrower will pay in interest can vary widely.
A perk when using a reverse mortgage is that borrowers don’t have to make monthly interest payments on the loan or on their home, the article notes.
“What makes a reverse mortgage appealing is it doesn’t have to be paid back, which is why many homeowners use them as last resort for income,” the article writes.
The loan is also non-recourse, which means even if the home value drops, neither the homeowner nor the estate is responsible for the difference. But borrowers also need to keep in mind they will still be required to keep up with other payments on the home.
Sun American Mortgage Company wrote the very first Government Insured Reverse Mortgage in the Southwest over 25 years ago, and they remain an important provider for these effective retirement planning tools even today.
Click here to read more about reverse mortgages: https://sunamerican.com/reverse-mortgage
Feel free to call them to find out how your retirement can be for fulfilling with a Reverse Mortgage in you plan. 480 832-4343