When reverse mortgages were first introduced they were aimed squarely at the retired citizens living on a fixed income. Increasingly, people are using the mortgage as a way to get their finances in order before they enter retirement.
Lump Sum to Help with Debts
One of the major reasons people are doing this is to pay off their debt. Since the reverse mortgage does not have to be repaid until the home is sold or the homeowner passes away, people are not incurring an extra payment. Getting a large lump sum can help people take care of their final debts and free up cash flow. This is especially helpful for people who are facing a significant decrease in their income at retirement.
Move Down in Home
Another reason people choose to use a reverse mortgage is to facilitate moving into a smaller, less expensive home. Most people approaching retirement age are empty nesters. The large home with a big yard is not necessary anymore. However, since the real estate market is still struggling with the recession, selling a home can take 3 months or more. In order to buy the home they want right now, people at least 62 years old are using their available equity and buying their next home. Then, when the older home sells, they can pay off the reverse mortgage. This allows people the chance to buy a home with little to no debt and no new mortgage payment.
Obtain Rental Property to Improve Cash Flow
Some people are also taking advantage of their built up equity and purchasing rental properties. Buying one or two properties for cash allows these investors to improve their monthly income amounts. It also gives them a good investment that should go up in time.
Visit our reverse mortgage page for additional program information.
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