Top Benefits of a Reverse Mortgage

Understanding reverse mortgages.

A reverse mortgage can revitalize your finances. The industry has been tarnished by misinformation. A homeowner who understands the risks associated with the loan can make a smart decision about their finances.

Reverse mortgages make sense for a particular swath of the population. People who are at least 62 years old, own their homes, and need extra cash. Because it’s a loan, a reverse mortgage is only a good idea if you really need the money. The loan uses the value of your house as a security. Instead of making monthly payments and increasing your equity in your home, you’ll receive money. The equity you have already built in your home is used to give you a monthly payment, line of credit, or a lump sum after closing.

You can remain in your home for the rest of your life. In fact, it’s smart to do so. The loan won’t become due until you pass away or move out of the home. Your home is typically used to satisfy the debt.

If you’re interested, you can learn about the intricacies of reverse mortgages here:   

Let’s review some of the advantages.

You’ll Have Extra Cash

Retirement isn’t easy. The typical American family struggles to save enough money. People live a long time! Retirement typically begins around age 65 yet Westerners are living to 80 and longer. Your fund might have to support you for decades.

If you find yourself entering retirement without a sizable nest egg, a reverse mortgage can be life-changing.

The extra money can pad your existence. Your bank account might be enough to cover the necessities and nothing else. The funds you receive from your reverse mortgage can finance your luxuries and splurges.

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You have multiple disbursement options to choose from. You can receive a lump sum of cash, monthly payments, a line of credit, or a combination.

You Don’t Have to Move

A reverse mortgage is perfect for you if you’re planning to spend the rest of your life in your current home. You don’t have to own it outright but you should have very few payments left.

Knowing where you’re going to spend your final days can provide great comfort.

You should be aware, however, that it will be difficult to leave your home to your heirs. After you pass away, the full amount of the loan will become due. Your estate can sell the house to satisfy your creditors, or the loan can be repaid in cash. If neither your estate nor your heirs have enough money, there will be no choice but to give up the house.

Your Mortgage Payment is Eliminated

With a traditional mortgage, you have to pay a monthly fee. A reverse mortgage frees you from that responsibility. You’ll be in the much more comfortable position of receiving money rather than having to spend it.

Not having to pay a mortgage payment will be a load off your mind. It frees up your money. The fewer bills you have to deal with, the less stress you’ll have.

You still have to pay your property taxes and regular home maintenance fees.

You Can Delay Social Security

You can legally claim Social Security when you’re 62. However, you’ll receive extra money for every year that you delay taking benefits until you’re 70. With a reverse mortgage, you can put yourself in a position where you don’t need your Social Security money. You can access enough cash to fund your lifestyle.

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You’re Protected

If the housing market tanks, it won’t affect your reverse mortgage. The loan is protected and insured by the federal market. Your estate is safe as well. When you pass away, your house can be used to satisfy the loan. If the house doesn’t sell for enough to cover the amount, the insurer eats the loss. On the other hand, if the house performs better than expected and sells for a high price, your estate will receive the excess money.


You can use the money from your reverse mortgage on anything that you want. Going on vacation is as valid a choice as buying your groceries. Only you can determine what you want your retirement to look like.

A reverse mortgage might be enough money to fund your dreams. They’ve been misrepresented in the past, perhaps because of the high fees associated with originating the loan. There are also people whose situations make a reverse mortgage a very bad idea. If the money will only make a dent in your debt, getting the loan will only delay the inevitable. You have to be able to afford normal homeowner costs.

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