Should I Use a Reverse Mortgage to Enjoy Retirement?
By Tyler Plack
Tyler Plack is the President of South River Mortgage. Tyler holds an active FHA Direct Endorsement (DE) underwriting certification and is the author of The Retirement Solution: Maximizing Your BenefitTyler is a seasoned entrepreneur and real estate investor renowned for his expertise in reverse mortgages and his commitment to addressing seniors' equity challenges. Tyler brings a unique perspective to his ventures, having built several successful companies throughout his career. His insights are frequently sought by industry publications, where he is recognized for his vast knowledge in the realm of reverse mortgages.
An avid investor in income-producing properties, Tyler is dedicated to helping seniors navigate their financial needs with compassion and expertise. When Tyler is not helping solve America's retirement crisis, he is a skilled pilot flying airplanes for fun.
Enjoy Retirement
Supplementing Your Income Fixing Up Your Home Paying for In-Home Care Delaying Your Retirement Plan Withdrawals Is a Reverse Mortgage Right for You?
Many people imagine retirement as a carefree time. That’s the dream for most, but all too often, financial worries and constraints get in the way. A reverse mortgage may not be the right solution for every retiree, but in many cases, it can supply you with the funds you need for just about anything.
Wondering what you may be able to use your reverse mortgage funds for? Here’s a closer look.
Supplementing Your Income
With the cost of living going up seemingly every day, many retirees (and those planning for retirement) worry their retirement savings may not be enough. Social Security benefits can help, but they often aren’t enough to cover your expenses.
Many people who take out reverse mortgages elect to receive their loan proceeds in monthly installments. This extra income can grant you the financial security you need to truly relax.
Paying Off High-Interest Debt
Dealing with debt in retirement adds another layer of stress. If you’re paying off credit cards or high-interest loans, you might consider using some of your reverse mortgage funds to wipe them out.
Using your loan to consolidate your debt comes with another advantage — it helps simplify your life. If you have multiple credit cards or other accounts open, keeping track of monthly payments is likely taking up more mental energy than you realize. When your reverse mortgage is the only debt you have, relaxing into retirement gets easier.
Fixing Up Your Home
Making repairs to your home can be expensive. When you’re retired, unexpected appliance breakdowns and other issues have a greater financial impact than they used to.
If you’re planning on renovating or there are a few things you’ve been meaning to fix, a reverse mortgage might offer the funding you need. You also might choose to set aside part of your loan proceeds to cover surprise repairs.
Traveling or Pursuing Hobbies
Achieving financial stability is important in retirement but so is enjoying yourself. If you’ve always wanted to visit Europe or get into mountain biking, you can fund these exciting new endeavors with money from your reverse mortgage.
Paying for In-Home Care
When you have a reverse mortgage, you must maintain your home as your primary residence. You likely don’t want to move into a care facility — if you do, your loan balance becomes due immediately.
Fortunately, there’s an alternative. It’s not unusual for homeowners to use the proceeds from a reverse mortgage to pay for in-home care.
Covering Medical Expenses
Even if you don’t anticipate needing an in-home caregiver, you may find that your medical expenses increase with age. Your reverse mortgage can help cover the cost so you don’t go into medical debt. If you have existing medical debt, your loan proceeds can help with that, too.
Delaying Your Retirement Plan Withdrawals
With the right planning, your reverse mortgage can save you money while giving your retirement accounts more time to grow. Many retired people find that they need to make an early 401(k) withdrawal or two. These withdrawals are taxed at a higher rate.
Putting off your 401(k) withdrawals means you can minimize the taxes you pay — and give the funds in your account time to accumulate more interest.
Buying Another Home
Most people who take out reverse mortgages do so because they want to remain in their home. However, under the right set of circumstances, you can also use a reverse mortgage to buy another home.
This is called a “reverse mortgage for purchase,” and it involves selling your existing home and using the money to put a large down payment on a new primary residence. You can then take out a reverse mortgage to finance the rest of the home.
This option is complex, and it may not be right for everyone. It’s ideal for homeowners who want to downsize or relocate to a less expensive area.
Is a Reverse Mortgage Right for You?
If a reverse mortgage lines up with your goals, it can put you on the fast track to a happy retirement. However, this is a momentous decision, and it’s not one you should rush into.
The South River Mortgage team can help you learn the ins and outs of reverse mortgages so you can better determine whether one is right for you. Contact us now to get started!
