Planning for retirement can be hard, especially if you have to worry about long-term care, investments or annuities, or not having enough money to live on. All of these make things worse than they need to be. Some of that stress could be taken care of by a reverse mortgage. Most seniors will need to spend less once they retire, so a reverse mortgage may give them the extra cushion they feel they need even before they retire. Social Security, IRAs, 401ks, and other ways to make money in retirement usually give you enough money to cover your living costs and do fun things, but they don't leave you much room to improve your financial future. A Reverse Mortgage is becoming an increasingly popular way to get access to a large amount of tax-free money that can be used to buy investments and securities with higher returns.
Reverse mortgages are a type of loan that is regulated and backed by the federal government. They let people who are 62 or older take equity out of their home, which is usually their biggest asset. With a Reverse Mortgage, the borrower can get up to 60% of the home's appraised value in a number of different ways, and they don't have to make a single payment as long as they stay in the home. All payments, closing costs, and interest are paid back when the senior moves out or sells the home. This makes a lot of money and there is no chance of defaulting or losing the home.
One of the best things about a reverse mortgage is that the money isn't taxed at all. A reverse mortgage also has no effect on benefits from Social Security or Medicare. When you use a reverse mortgage to make money by adding to your investment portfolio, it helps you even more. For example, a couple both 65 years old with a $200,000 home and no mortgage who want to buy either an immediate annuity or a long-term care insurance policy together. With interest growth and a long-term care rider, a reverse mortgage could give you over $100,000 to pay for an annuity or a single-premium insurance policy.
Reverse mortgages are a good way to invest because of two things about the product. The first is that any money that comes in from a reverse mortgage is tax-free and won't change the applicant's tax bracket. The problem for the senior or anyone else is that they have to get rid of the asset they are selling in order to get their hands on the money. Not if you get a reverse mortgage. With a reverse mortgage, everyone wins.
With a reverse mortgage, you can get access to the value of your biggest asset without selling it or paying for it in any way. As more and more seniors reach their mid- to upper-sixties and seventies, they will try to get more money. Again, this is why a reverse mortgage will remain a popular way to make money in the years to come.
