Consider learning about a reverse mortgage
We are all taught to save money throughout our lives.
“Save for a rainy day” or “save for retirement” are phrases I remember from my parents. They lived through the Great Depression and World War II, and learned early that having a nest egg of money is essential in getting through the hard times.
Many studies today show that while people have a pension and / or social security income when they retire, one of the largest single sources of wealth is the value of their home. As Realtors, we are very aware of the potential tax benefits of home ownership, and we know that home ownership is the foundation for stable and thriving neighborhoods. But we also know that home ownership can build real wealth.
Look at most homes today. While there are exceptions, a home is generally worth two to three times what it was 30 years ago. So if that homeowner paid $30,000 in 1985 for a home, it could easily be worth $60-$90,000 today. During those 30 years, the home provided shelter, security and hopefully enjoyment, in addition to being an investment.
In retirement, that paid off home continues to provide the shelter, security and enjoyment, and it also might be able to provide financial security, too.
Through a reverse mortgage, a senior citizen homeowner can tap into that equity and use the value locked up in the home as income for travel, medical expenses or anything he / she wants. Sure there are some responsibilities, like paying the property taxes, insurance and maintenance, but those do not change when you have a reverse mortgage.
The retiree still owns the home, does not have to make payments to the bank and if he / she continue to pay the taxes and insurance, cannot be forced to leave the home. Through a reverse mortgage, one of a senior citizen’s largest assets now becomes a bank too.
Reverse mortgages are simply a way to tap into one of your largest sources of wealth without selling your home. There are definite rules, and through different lenders, there are different costs. However, the general rules remain the same. Once you move out of your home, it must be sold to satisfy the mortgage. As a Realtor, I have been involved in selling a few homes with reverse mortgages on them, and it isn’t any different than selling a home with a conventional mortgage.
Reverse mortgages aren’t for everyone. Talk to a trusted financial advisor, accountant, lawyer or banker before you call about a reverse mortgage. They can be a valuable tool you should consider.
Darlene Mink Crouse is the 2018 president of the Warren Area Board of Realtors.