Top 5 Reasons People Get Reverse Mortgages
Once you’ve done your research on reverse mortgages and gained a more complete understanding of the product, the next step is to decide if a reverse mortgage is right for your situation. If you’re eligible (a homeowner 62 years of age or older with equity in your principal residence), this may be a quick decision or one that requires a bit more consideration.
As with any decision, it’s always helpful to get the perspectives and experiences of others who have faced similar situations and asked themselves the same questions. So for those other folks who have decided to get a reverse mortgage, what were their reasons? We’ve asked some of our readers and site visitors and below are the top 5 reasons people get reverse mortgages:
1. Retire in style! Most homeowners getting close to retirement age have spent that last thirty years or more making mortgage payments; depending on where you live, this monthly obligation could be anywhere from a few hundred dollars a month to a few thousand dollars a month and beyond – phew! Every month that one big check goes out the door to the bank and leaves you with that much less cash to save, invest or spend on the items you need and want. How great is it to finally turn the tables on Main Street Bank, where they now send you a check each month? Most retirees have steady monthly costs, such as housing, medical, insurance and other necessary expenses. For non-working retirees, those expenses are managed with a fixed income from retirement accounts, pension plans, social security or other plan. The reverse mortgage allows a retiree to increase their fixed income and provide cash to do some things that they might otherwise not be able to afford to do. Typically, the personal quality of life is the number one reason people get reverse mortgages.
2. Pay hospital or medical bills. For many older Americans and retirees, medical issues are an increasing reality in their daily lives. With the ever rising cost of healthcare, this can put tremendous demands on a fixed income. Ongoing medical treatments, prescription drug regimens, or a large one-time (possibly unforeseen) medical bill are all top reasons that people get reverse mortgages.
3. Improve or modify a home. While this may not be an expansion of the home, the early part of retirement is a great time to re-purpose your house to accommodate the way you will be living for the next ten, twenty, thirty years and on. Maybe it’s time to expand the kitchen, widen the hallways or remove some steps, or exchange the old pool in the backyard for a beautifully landscaped garden. As we get older, a top reason people get reverse mortgages is to outfit their house for their new lifestyle.
4. Dream vacation. What better time to just get away than when your working days are behind you and the weather turns a bit gloomy? Proceeds from a reverse mortgage have allowed many homeowners to take that vacation they’ve always dreamed about, but never had the time or resources to take. Bon voyage!
5. Pay off high interest rate or problematic debts. With the large amount of debt that the American consumer accumulates over a lifetime, it should be no surprise that this is a top reason people get reverse mortgages. Whether it is high interest rate credit cards, a relative’s student loan debt, or even a potential foreclosure that must be dealt with, reverse mortgages can be a very effective way to get a large sum of cash to manage other debts.
These are the top 5 reasons people get reverse mortgages. Once you’ve made a decision to move forward with a reverse mortgage, send us your top reasons and we’ll add them to the list!
Article by bills.com