Given the high cost of homes, most Americans use a considerable amount of their income to service the mortgage on their house. Poor credit score leads to high-interest rates on loans and private mortgage insurance drives up the monthly payments.
If a significant portion of your paycheck goes towards the home, you’ll have a hard time creating a sizeable nest egg. As a retiree, you can take advantage of the reverse mortgage program and have your home return the favor, recommends Primary Residential Mortgage, Inc.
Leverage the Equity in Your Home
If you’re 62 years of age or older, you can use the amount of equity you’ve built in your home to improve your finances. Under this program, you can take out a loan on the equity to meet your financial obligations. Unlike a conventional loan, you’ll not have to repay a reverse mortgage.
Instead, the bank allows you to borrow money against the home’s equity but will only collect on the debt if you vacate the house or meet your demise.
Depending on your needs, the lender can advance a line of credit to meet your daily essentials including medication and medical bills. If you have a pressing need, such as a house that’s falling apart, you can take a lump sum and tend to it.
Safeguard Your Investments
The bond and stock market often make excellent investment vehicle, but you need to cash out at the right time, preferably when the market is vibrant. If you have much of your retirement money there, you can’t afford to wait until the market is on a high. Luckily, you can use a reverse mortgage to wait out a lousy market and ensure that you don’t lose any money. You weather an economic downturn without compromising your portfolio.
In most cases, it takes most homeowners an entire lifetime to build sufficient equity in their home, which leaves them vulnerable during their sunset years. If your finances fall on the lean side, you can leverage that equity and bolster your financial position in retirement.