e have discussed many aspects of the reverse mortgage program, the nuts and bolts, the requirements, the lending limits, etc. Now, I would like to touch on the different ways a reverse mortgage can take care of you.
If you do not have a mortgage on your home, congratulations! What a huge accomplishment, owning your home free and clear! If this is your situation, the reverse mortgage may be able to provide you with a monthly income and also provide you with a line of credit to access. It may also be able to provide some cash at closing, if you desire.
If you do have a mortgage, that lien must be paid off so that the reverse mortgage is the only lien on your property. Now you no longer have to make that monthly mortgage payment, so you have that money to use however you wish! This is a huge relief to many of my clients.
Many seniors have paid off their home completely at some point in their life. Then, as time goes by, they find that their income can't keep up with the rising costs of necessities. We are all feeling the pinch at the gas pumps these days. Now add to that the rising costs of prescriptions and the decline of prescription coverage, and imagine how trapped many seniors feel on a fixed income. The healthy real estate appreciation experienced in recent years has certainly made it easier to take equity out of our homes to maintain our lifestyles. But, with any "forward" mortgage, there is always that pesky payment.
Some seniors considering a reverse mortgage have opted for a regular line of credit on their home. But, there again is that monthly payment! Typically, seniors who choose the regular line of credit instead of a reverse mortgage, come back in about two years for a reverse mortgage. Eventually, they were borrowing money out of the line of credit to make the monthly payment! That seems rather stressful.
The money you receive through a reverse mortgage can be used for any purpose you like. You can:
1) Purchase long term disability insurance
2) Purchase life insurance to provide for your family
3) Pay for education expenses for a child or grandchild
4) Invest in other financial vehicles
5) Take a trip around the world, buy a car, home improvements
6) Pay for healthcare
There are no restrictions on how you use the money. It's yours to do with as you wish. Some seniors use the funds to give to their children while they are still around to watch them enjoy it. Perhaps paying off an adult child's mortgage would give you great pleasure.
You can certainly enjoy yourself too! And for many, that simply means having the peace of mind that comes with having money in the bank, or in a line of credit, ready and waiting. This time of your life is meant to be enjoyed. You have worked so hard to get to this point, now you should enjoy your golden years. Time to put the financial woes behind you and get out there and have some fun!