Four Ways to Use a Reverse Mortgage
Most of my readers know that my company now offers reverse mortgages through its subsidiary, Holland Mortgage Services. We’ve talked about these loans here a few times, but there is way too much information to squeeze into one weekly column. If you are curious about the reverse mortgage process, please give our office a call. Today, I’d like to share a few of the ways I’ve seen clients use the cash they receive from a reverse mortgage.
Pay Off an Existing Mortgage. If you already have a substantial investment in your home, and you find your mortgage payments to be a burden, a reverse mortgage can eliminate that monthly principal and interest payment for your lifetime! Keep in mind that you must be age 62 or older and you must continue to reside in the home. You are also required to pay real estate taxes, homeowners’ insurance and HOA fees (if applicable).
Purchase a Home. Let’s say you’re tired of the snowy winters and you would like to make your permanent home in balmy Florida. You can actually sell your current home and apply for a reverse mortgage to purchase that dream home in the Sunshine State. This allows you to down-size, or up-size, to a home that’s just “the right size” for you! The process is a little more complex, but our firm just implemented this exact transaction for a couple from Colorado (Talk about cold – brrrrrrrrrr!). Again, no principal or interest payments during your lifetime if you stay in the home.
Cash-Out. What if you simply want or need the money? A reverse mortgage could be the answer. Maybe you’ve been wanting to remodel your home, buy a new vehicle, or travel? Or, maybe you have outstanding medical or credit card bills you want to eliminate. Funds received must be used to pay off your home’s existing mortgage first, but the remaining funds can be used in any way you choose. This “cash-out” option has special appeal to those who hold no home mortgage.
Line of Credit. You can establish a line of credit with a reverse mortgage, and, if unused, that line of credit will automatically increase over time! There is the possibility you could accumulate a sizable emergency fund that could be drawn against when, and if, you ever need it! There are some practical and smart uses for this strategy in particular. For more details, join me again next Sunday to learn about the little-known benefits of a reverse mortgage line of credit!