Four Reasons to Consider a Reverse Mortgage

For people entering their retirement years or those already retired, this type of loan can be a good option. It is basically an equity loan that is paid to the homeowner in monthly installments. It is not something that is for every retired person, but for many in retirement, it is a good option and often an ideal solution for retirement years. The following are four reasons you might want to consider getting a reverse mortgage.

You are on a fixed income
If you are on a fixed income in retirement, you may find that your standard of living is lower than you planned it to be. There may be things you wanted to do in retirement that you found out you cannot afford to do. You may want to travel more in your retirement or engage in other activities that cost more than you can afford. By receiving a check every month as payment for the equity in your home, you will be able to do more in your retirement years.

You have enough income for house expenses
Even if you are on a fixed income, you will need to make sure that after obtaining this type of loan, you will have enough money to pay for the expenses related to your home. Specifically, this is in regard to property taxes and insurance. Although you will need to have money for maintenance on your home, it is the issue of taxes and insurance that can cause trouble with your lender.

You do not need your equity for emergencies
The equity in your home is a form of savings, and like any savings, some of it can be set aside for emergencies. In your retirement, you need to make sure that you are prepared for emergencies. One area to look at is whether you have sufficient medical insurance to protect yourself financially.

You plan on staying in your home
If you plan on living your retirement years in your home, then getting this type of financing on the equity in your home may be ideal for you. Although it is possible to sell your home after taking out this type of mortgage, it is usually best to simply sell your home and cash in your equity. However, if you plan on staying, this may be the best way to tap into the equity in your house.

If the above four criteria fit your financial situation in retirement, you may be a good candidate for this special type of home equity financing.