Retirement should be a time to enjoy the life you’ve worked so hard to build—not to worry about how far your savings will go. Yet, with today’s longer lifespans and increased cost of living, many retirees are discovering that Social Security, pensions, and personal savings alone aren’t enough to support the lifestyle they imagined.
Fortunately, for homeowners 62 and older, there’s a valuable resource that can help bridge the gap: home equity. Unlocking the power of your home equity with a reverse mortgage can give you access to the cash you need to live more comfortably and confidently in retirement.
Home Equity: A Flexible Retirement Resource
With ongoing economic uncertainty and senior homeowners accounting for significant amounts of home equity, it’s no surprise that more people are turning to reverse mortgages to supplement cash flow and support their retirement goals.
A reverse mortgage is a loan designed specifically for homeowners 62+ that allows you to convert a portion of your home’s equity into cash—without having to sell your home or take on monthly mortgage payments. Of course, as with any mortgage, meeting all loan obligations, including keeping up with property taxes, insurance, and maintenance, is required.
Unlike a traditional mortgage, where you make monthly payments to the lender, a reverse mortgage gives you access to funds that can be used as you wish without making monthly mortgage payments.1 The loan is typically repaid when you sell your home, move out, or no longer occupy the property as your primary residence.
How a Reverse Mortgage Can Help You
Reverse mortgages offer several key benefits that can provide greater financial flexibility and peace of mind for retirees, or those nearing retirement:
- Independent Counseling: Every reverse mortgage requires counseling as part of the application process. Designed as a safeguard, it’s meant to ensure that you fully understand your options and responsibilities, helping you make an informed decision.
- Flexible Access to Funds: Loan proceeds may be distributed as a lump sum, monthly payments, a line of credit, or a combination, tailored to your unique goals.2
- Increased Cash Flow: Proceeds are first used to pay off any existing mortgage, eliminating that payment and opening up room in your budget. And with no monthly mortgage payments required,1 even more money can be redirected toward living expenses, healthcare, or other priorities.
How You Can Use Reverse Mortgage Funds
You can spend your reverse mortgage funds however you like. While it’s important to consider how these funds fit into your overall financial plan to make your money last, there are no restrictions on how you spend them. And because the money comes from the equity in your home, the IRS doesn’t consider it as income, so it generally doesn’t affect your Social Security benefits.3
A few common uses of reverse mortgage funds include:
- Paying for everyday expenses, bills or credit-card balances, or consolidating other high-interest debts.
- Helping to cover healthcare costs or buy long-term care insurance.
- Establishing a reverse mortgage line of credit that can grow over time4—providing peace of mind now and financial protection for the future.
- Making necessary repairs or upgrades to help you remain in your home longer and comfortably ‘age in place’.
- Using the proceeds to avoid depleting your savings or invested assets.
- Helping family members with major expenses—like a grandchild’s education.
- Taking a dream trip or investing in hobbies you’re passionate about.
Could a Reverse Mortgage be Right for You?
More and more financial advisors are recognizing that a reverse mortgage can play a valuable role in a well-rounded retirement plan.
For homeowners who want to improve cash flow and plan to stay in their home long term, a reverse mortgage may be worth exploring. To see if it’s the right fit for your retirement goals, it’s best to discuss your unique needs and circumstances with your financial advisor. Our loan officers would be happy to provide information to you and your financial team.
Your home isn’t just where you live—it’s one of your most valuable assets. A reverse mortgage gives you the opportunity to put that equity to work, helping you enjoy the retirement you’ve always envisioned.
Interested in learning more? Contact our team today for a no-cost, no-obligation quote—your future self may thank you!