Reverse Mortgage Myth Buster #3
Another common misconception I hear is that “a Reverse Mortgage is a loan of last resort.” The assumption has been that a Reverse Mortgage should only be considered after you have exhausted all other financial options and you have virtually run out of money.
In fact, a Reverse Mortgage used responsibly should be a part of more people’s retirement income strategy. Many financial planners are finally beginning to see the benefits of a well-used Reverse Mortgage. Meaning, this may provide additional tax free income, or provide a buffer asset (emergency fund), or even pay off an existing mortgage; all while eliminating your monthly mortgage payments from that day forward. The challenge for retirees is to manage their assets in such a way that it efficiently meets their financial goals while mitigating retirement risks. Nobody wants to run out of money too early!
This means that responsible use of a HECM Reverse Mortgage can do just that by creating more monthly cash flow from an otherwise illiquid asset (i.e. your home equity). This in turn allows the senior homeowner to live more comfortably and have more financial peace of mind. Please don’t underestimate the life changing benefits that a Reverse Mortgage can provide.