The Reverse Mortgage: Could it be for Me?

By Linda Jordan, Seniors Real Estate
Specialist and Downsizing Coach –

It’s no secret that the reverse mortgage has been on the rise lately. For those aged 62 and older, it can mean the difference between buying a home they think they can afford and buying a home they love.

When you’re ready to choose a home to spend the remainder of your life in, the idea of taking on another mortgage payment can be daunting, especially during a time when you’re living off a fixed income or retirement savings. Not to mention, you may need access to additional funds to secure your quality of life. For some, this means buying the home they love, or staying in the home they love, just wouldn’t be feasible.

That’s where the reverse mortgage comes in. With a reverse mortgage, those age 62 and older can have access to an FHA insured loan designed to help them buy their next home or refinance their current home with one initial investment without having monthly mortgage payments. Though the borrow needs to be the primary occupant of the house, they won’t need to repay the loan until they no longer use the home as their principal residence or fail to meet the obligations of the mortgage.

Because of this leniency, more cash flow can be freed up for retirees to use toward medical expenses and house upkeep, among other necessities. The borrower also has convenient options to access these funds, including taking a line of credit, a lump sum or monthly payout. With the amount of options a reverse mortgage provides, it’s no surprise that more and more seniors are considering this option.

The National Association of Realtors shows that 22% homebuyers are age 62 and older, the age at which a borrower can apply for the reverse mortgage. Of these homebuyers age 62 and older, 82% are taking out a mortgage on a new home purchase. However, less than 1% of these homebuyers are using a reverse mortgage, even though it may provide a better option for them and their needs.

As with any financial tool, a consultation with a reputable, experienced mortgage lender that specializes in the reverse mortgage or home equity conversion mortgage, along with a financial advisor, is recommended in order to analyze housing finance strategies that serve seniors today and tomorrow.