Reverse Mortgages & How They are Used as a Retirement Financial Tool
The primary purpose of a reverse mortgage in years past was to help seniors life comfortably and pay living expenses using the equity in their homes. Since that time, things have changed. Now, seniors may not be “cash poor” or need money to pay living expenses, however many choose a reverse mortgage as a tool in planning their retirement. How can this unique loan be used in planning your financial future?
1. You can delay Social Security and pension payouts
Social security and pensions may result in more if you can delay payment. A reverse mortgage gives you the cash you need to enjoy financial security, which means you can wait longer to receive social security or pension payouts that will pay more if you wait longer to receive these benefits.
2. You can postpone drawing down retirement assets, giving assets time to grow
Retirement assets have time to increase. As with pension payouts and social security benefits, the longer you can wait the longer your retirement assets have to grow, so you can postpone drawing from retirement funds.
3. You can increase your cash flow by eliminating monthly mortgage payments
Eliminating monthly mortgage payments increases cash flow. A reverse mortgage can pay off your existing mortgage, meaning you no longer have a big chunk of your income going toward the mortgage each month. Ultimately, you enjoy having extra cash in your bank account you can use for other purposes.
4. You have access to a low cost, non-cancellable, GROWING line of credit
Your line of credit will be greater in the future, continuing to grow. While you may not have a substantial credit line available now, a reverse mortgage allows your available credit to grow over time. This growing line of credit is non-cancellable and low cost, so you enjoy more available credit in the years to come.
5. You can protect your portfolio performance in a down market
Even in a down market, your portfolio performance is protected. Most peoples’ investment portfolios decline along with a down market. By obtaining a reverse mortgage, you have the funds you need to protect your portfolio until the market flourishes again.
6. You can have annuity-style payments using your home’s equity
Using the equity in your home makes it possible to receive a steady flow of cash, similar to annuity-style payments. Many seniors prefer not to receive the money from a reverse mortgage in one lump sum, but rather in annuity-style payments so they can plan payment of expenses and know how much income is available each month.
7. You can replace cash reserves
Enjoy financial security by replacing cash reserves. Seniors often have less money in the bank than they feel comfortable with, particularly in the case of an emergency. With a reverse mortgage you can get back up to speed financially, which gives you peace of mind.
As you can see from the examples above, there are many ways a reverse mortgage may be used as a strategic tool in financial planning. We urge you to contact Paul Vannerus at Omni Fund today to learn more about reverse mortgage loans, and how they can benefit seniors financially.