What Is a Reverse Mortgage?
A reverse mortgage allows homeowners aged 55+ to access up to 55% of their home’s equity in tax-free cash, without making monthly mortgage payments. The loan is repaid when the home is sold or the homeowner moves out.
Benefits of Reverse Mortgages
- No Monthly Payments: Improves cash flow in retirement.
- Tax-Free Funds: Use funds for living expenses, renovations, travel, or supporting family.
- Stay in Your Home: Access equity without selling your property.
- No Negative Equity Guarantee: You’ll never owe more than the home’s value.
Potential Drawbacks
- Interest Builds Over Time: The balance grows as interest accumulates.
- Reduces Estate Value: Less equity will be available for heirs.
- Fees Apply: Setup and legal costs may apply.
Who Should Consider It?
A reverse mortgage can make sense for retirees who:
- Want to age in place.
- Need extra income without monthly debt obligations.
- Have significant equity in their home but limited retirement savings.
The Bottom Line
A reverse mortgage can provide financial security in retirement, but it’s not the right fit for everyone. I’ll help you weigh the pros and cons for your situation.
