The Loan Less Traveled—How a Reverse Mortgage Loan Can Benefit Your Retirement Journey
A reverse mortgage is becoming a more popular way to fund retirement
For older adults, high debt burdens can be a significant barrier to borrowing from home equity. In fact, research from The Ohio State University found that 51% of adults age 62 or older — even those with good credit scores — are unable to obtain a home equity line of credit because their debt-to-income ratio is too high.
Even for those with sufficient home equity, traditional mortgage products are harder to secure. According to the research, 36% of borrowers have been denied a Home Equity Line of Credit (HELOC) or a second mortgage despite having adequate equity built up in their home.
So, if you’re planning to use a traditional mortgage to fund your retirement, you may need a backup plan.
Is it time to break with tradition?
If you're at or near retirement age and in the market for a HELOC or a second mortgage, you may qualify for a less conventional way to secure the needed funds — a reverse mortgage loan.
Reverse mortgages — both federally-insured* Home Equity Conversion Mortgages (HECMs) and proprietary loans — are gaining popularity as flexible, highly-customizable mortgage products that may be wiser choices for adults age 60 and over, depending on your situation. Income and credit requirements are more lenient, but 50% equity or more in your home is usually required to get a reverse mortgage.
For qualified applicants, these products can be smart financial tools to leverage the funds amassed in your home, free up cash and help to create a more financially secure retirement lifestyle — all while continuing to own your home with your name on the title and live in it as your primary residence. The funds can be accessed as a lump sum, monthly payments, a standby line of credit to fall back on as needed, or any combination of these. **Best of all, you can use the money as needed to supplement your income, cover medical expenses, travel, make home renovations and more.
And unlike traditional home equity loans, reverse mortgages don’t require monthly payments. You can pay as little or as much as you want, when you want. You may even pay off the loan early with no repayment fees. As with a traditional loan, borrowers are still responsible for keeping up with their loan obligations, including paying property taxes and homeowners insurance and keeping up with basic home maintenance and repairs.
An overlooked retirement strategy
Too often, reverse mortgages are dismissed as “last resort” loans. But with noted financial advisors conducting research, more are finding that a reverse mortgage can greatly increase the probability of a successful long-term financial plan under the right circumstances.
Rather than stress over qualifying for a traditional financial tool like a HELOC, you may want to take a second look at how a reverse mortgage can afford you a more comfortable retirement. Reverse Mortgage Funding (RMF) can answer your questions and help determine if it’s the right tool for you. To learn more, call RMF today at (888) 277-1567 and schedule a free, in-person appointment with a loan specialist in your area.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.8-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.
**Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages.
SEE WHAT FUNDS YOU MAY HAVE AVAILABLE
If you have equity in your home and believe you meet the eligibility requirements, a HECM may be the option that could help you retire smart.