A lot of us want to fill gaps in our retirement and want something to help us live our dreams once we stop working. A reverse mortgage is a financial tool to help us achieve exactly that. With a reverse mortgage, senior citizens sixty-two and older receive a loan backed by the equity in their homes.
Payment isn’t made until the person is no longer living in the house or till he dies. Right now is the perfect reason to pursue a reverse mortgage as there is no longer any more asset-based lending due to the change in rules in the past. Today, all loans are income-based, and with a decrease in income, it gets tougher to qualify for a loan.
Reverse mortgage allows you to maintain your lifestyle and make money from the equity in your house, thus making it critical and essential in your retirement planning strategy.
There are various reasons to obtain a reverse mortgage right now. For some, its to buy a second home, or to retire early, or to travel around before they get too old. For others, a reverse mortgage is simply to have a peaceful state of mind.
We list five reasons why it is essential to get a reverse mortgage right now!
1. A Second Home
A lot of people are taking equity from reverse mortgages to buy second homes. This second home can either be to rent out or a vacation home. In other words, many senior citizens can use a reverse mortgage to get a second home, which they can rent out to bring in an additional monthly retirement income of $2000-$3000.
For example, you can sell your home and use that money to invest and use the other half to buy a four-plex. Using reverse mortgage, you can pay for the remainder of the four-plex and fix up one of the units for yourself and use the remaining three to rent out and supplement your retirement. The rent from the three units will be huge and will change your life completely.
By using the money from the reverse mortgage to pay for a second home, you don’t have to worry about paying the mortgage as long as you live in the house you’ve taken the reverse mortgage out on. You can draw income from the second home and use it for your benefit in the future.
When you can use cash from the proceeds of the reverse mortgage to pay for the second home, you don’t have to worry about mortgage payments any longer, and if you want, you can draw income from it when you’re not in Florida.
That property will even appreciate and give you more to benefit from in the future. You don’t necessarily have to spend that money to buy a second home. It can also be something that you’ve dreamt of owning. A reverse mortgage is simply a tool designed to make u realize that you can achieve your dreams.
2. Retire Early
Another reason senior citizens should get a reverse mortgage is that they can turn the mortgage payment into a retirement account and use the proceeds to pay the bills. This allows those older than sixty-two to let their investments grow instead of using those investments to pay off the bills.
By opting for a reverse mortgage payment, you get to keep your house, get rid of the mortgage payments, and use the money to increase your retirement savings to last you for 10-20 years after retiring.
3. Travel
Senior citizens who haven’t got a retirement plan cannot think of any sort of travel. Daily expenses are their top priority. However, taking out a reverse mortgage can help those Americans travel and cross places off their bucket list, who have saved money for their retirement needs. Traveling is one of the greatest experiences in life and a great memory to look back to.
4. New Career
It is extremely difficult to get a business loan from a bank or to get a Small Business Administration loan, especially after the great recession, even for those who have a business with a cash flow.
However, by opting for a reverse mortgage and taking out cash in equity, senior citizens can use that cash to buy or start their very own business. A reverse mortgage is a smart way to take the money kept in equity and turn it into a long-term income stream if you have the aptitude to do so. If you are business savvy, you can turn the $150,000 into $1 million over 10 years.
5. Peaceful State of Mind
Lastly, and most importantly, nothing is more important in life than peace of mind. It is something everyone around the world strives to achieve: to be worry-less and content with life.
By obtaining a reverse mortgage, one can be at peace knowing that you have a line of credit increasing over time and is there if something happens. There is no monthly payment that needs to be paid and if you need extra cash, you can downsize and rent out the other portion of the house.
There is a lot of misinformation about what a reverse mortgage is, and not everyone understands it. But those who have opted for it. know that it is a financial tool that provides the opportunity to live a retirement life where you can enjoy your house that you have built into a home over the years without having to make monthly payments and stressing about cash flow. Yes, it does give you peace of mind.