A reverse mortgage is a type of loan that is designed for elderly homeowners to establish a line of credit that they can draw upon that is tied to the value of their home. This allows them to utilize their home equity without having to sell their home. The special thing about a reverse mortgage is that it doesn’t require the borrowers to make monthly payments. The amount pulled from the equity of the home is only paid back after the homeowner dies or sells the home. Here are reasons to get a reverse mortgage…
Paying off medical expenses
Medical bills tend to take up more and more of your income, as you get older. Unexpected medical problems can tear your budget to shreds, and destabilize what you once thought was a stable retirement plan, especially if you feel trapped inside of a fixed income. However, a reverse mortgage can be a great backup plan to use your home’s equity to work towards paying off medical expenses. This can keep your retirement plan on track without making any changes to your fixed income, not to mention keep you alive and healthy.
If financial difficulty puts you in a situation where you are in danger of being foreclosed on your long-time home, you don’t have to take drastic actions like taking loans that will bury you deeper than your primary mortgage ever did. Instead, you are able to use the equity that you have already built on your home to pay off the other half of the home, or at least get caught up on payments. Since it doesn’t add to your monthly mortgage payments, this can help you even out any financial hole you have gotten stuck in.
Many people who are approaching retirement age have aspirations to start their own business, now that the career they have worked hard for their retirement in is now over. However, business loans can be challenging to obtain in today’s financial environment, and it can be frightening to put your retirement savings on the line as business capital. The good news, though, is that you don’t necessarily have to do that. Instead, you can use a reverse mortgage as a financial tool to use the equity on your current home as a way to open a line of credit to use as business capital.