Reverse mortgages can be a great way for retirees to get the most out of their home equity. A Louisiana home mortgage loan officer weighs in on the subject and explains how these mortgages work and why they can be a good option for retirees.
“Reverse mortgages are a type of home loan that allow homeowners 62 and older to convert part of the equity in their homes into cash,” said Louisiana Home Mortgage Loan Officer Renee Dupre. “The amount of money that can be borrowed is based on the value of the home, the age of the youngest borrower, and current interest rates.”
Who is eligible for a reverse mortgage?
To be eligible for a reverse mortgage, you must:
- Be 62 years of age or older
- Own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse mortgage loan
- Live in the home as your primary residence
Benefits to taking out a reverse mortgage
According to Dupre, there are several benefits to taking out a reverse mortgage. “Reverse mortgages can give retirees the extra income they need to cover expenses, make home improvements, or even travel,” she said. “And, since the loan is not repaid until the borrower sells the home or passes away, there is no worry about making monthly loan payments.”
Retain ownership of your home
Dupre also noted that, with a reverse mortgage, the borrower retains ownership of their home. “Reverse mortgages are a safe and affordable way for retirees to stay in their homes and age in place,” she said.
Free up cash without selling your home
A reverse mortgage can provide retirees with the extra cash they need without selling their homes. “Reverse mortgages are a great option for retirees who want to stay in their homes but need extra income to cover expenses,” said Dupre.
Make improvements to your home.
With a reverse mortgage, you can use the extra cash to make improvements to your home. “Reverse mortgages can be used for any purpose, including home improvements,” said Dupre. “This can be a great way to increase the value of your home and make it more comfortable to live in.”
Pay off existing debts.
If you have existing debts, a reverse mortgage can help you pay them off. “Reverse mortgages can be used to pay off credit cards, medical bills, or any other type of debt,” said Dupre. “This can free up more of your income to cover your living expenses.”
A reverse mortgage can provide retirees with several benefits, including the extra income they need to cover expenses, the ability to make home improvements, and the option to pay off existing debts. If you are a retiree looking for a way to get the most out of your home equity, a reverse mortgage may be right for you.
However, as with any type of loan, consider some risks before taking out a reverse mortgage. “It’s important to speak with a financial advisor to make sure a reverse mortgage is the right decision for you,” said Dupre. “Be sure to compare different lenders and shop around for the best terms.”
Drawbacks to reverse mortgages
Reverse mortgages are not without their drawbacks. “One downside to reverse mortgages is that they can be expensive,” said Dupre. ” origination fees, appraisal fees, and other closing costs can add up. Additionally, reverse mortgages typically have higher interest rates than traditional home loans.”
Reduce your children’s inheritance
Another potential drawback to reverse mortgages is that they can reduce the inheritance that you leave to your children. “If you have a reverse mortgage and you pass away, the loan will need to be repaid,” said Dupre. “This means that your children may not inherit as much money as they would if you had not taken out a reverse mortgage.”
You can’t deduct the interest.
Unlike a traditional mortgage, the interest you pay on a reverse mortgage is not tax-deductible. “The interest on a reverse mortgage is not tax-deductible until the loan is repaid,” said Dupre. “This can add to the cost of the loan.”
“If you’re considering a reverse mortgage, it’s important to talk to a financial advisor to see if it’s the right choice for you,” said Dupre. “Reverse mortgages can be a great way to get the most out of your home equity, but they’re not right for everyone.”
To learn more about reverse mortgages, visit Renee’s website at https://louisianamortgageloanofficer.com/services/reverse-mortgages/
