• Question
  • What are the advantages of reverse mortgages? What other options are available?

    Asked by a 70 year old man from Huntington Beach, CA on 7/19/2012

    What are the advantages of reverse mortgages? What other options are available?

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  • Categories: Housing, Tapping home equity

Answers

  • Editorial 

    Editorial 
    NewRetirement

    San Francisco, CA

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  • Reverse Mortgages do have some significant advantages.

    Reverse Mortgages Offer:
    --> Flexibility: The main advantage of Reverse Mortgages is that they are an extremely flexible financial planning product with very few - if any - restrictions on how you receive and use the money.

    --> Easy Qualification: Unlike home equity loans, it is relatively easy to qualify for a Reverse Mortgage -- to secure a Reverse Mortgage you must be 62 years or older, own a qualified home and have sufficient home equity.

    --> No Payments: A Reverse Mortgage pays off your existing mortgage in full -- eliminating monthly mortgage payments. This can significantly improve your cash flow. Your loan amount will come due when you are no longer living in the home. At that point the loan is repaid -- usually by the sale of the home.

    --> Protection from Downturns in the Housing Market: With a Reverse Mortgage you will never owe more than your home's value at the time the loan is repaid, even if the Reverse Mortgage lenders have paid you more money than the value of the home. This is a particularly interesting advantage if you secure a Reverse Mortgage and then home price declines.

    --> Federally Insured: The Home Equity Conversion Mortgages (HECM) is the most widely available Reverse Mortgage. It is managed by the Department of Housing and Urban Affairs and is federally insured. This is important since even if your Reverse Mortgage lender defaults, you'll still receive your payments.

    You can find out more about the advantages and disadvantages of Reverse Mortgages here:
    http://www.newretirement.com/reverse-mortgage/reverse-mortgage-disadvantages-advantages.aspx

    In terms of other options for tapping home equity, there are home equity loans, home equity refinancing and downsizing. Intergenerational living or even renting out rooms in your home to friends are other options that seem to be gaining in popularity.

    However, if a Reverse Mortgage is of interest to you, NewRetirement can match you to a lender. All of our partners are prescreened and are licensed by the FHA, are members of the National Association of Reverse Mortgage Lenders (NRMLA), have good records with the Better Business Bureau and have been referenced checked:
    ---------------> https://www.newretirement.com/reverse-mortgage-marketplace.aspx

    You can also instantly estimate your Reverse Mortgage loan amount with the Reverse Mortgage Calculator:
    ---------------> https://www.newretirement.com/Services/Reverse_Mortgage_Calculator.aspx

  • Login to rate this answer:   Answered on 7/19/2012
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.