How To Upgrade Your Retirement
Retirement is an exciting moment in life many rightfully deserve after decades of working hard. But as exciting as not going to a 9-to-5 is, retirees still have some worries lingering after they launch into their retirement.
One of those worries is having enough money to stay retired, as well as enjoy that retirement without sacrificing those long overdue dreams, like traveling the world or wintering in Florida during cold winter months.
There are a number of ways to ensure those retirement dreams come to fruition without worrying about cash flow down the road. One way is to generate a second income capitalizing on a reverse mortgage. You can calculate your reverse mortgage options using this free online tool: https://reverse.mortgage/calculator.
“Many may be tempted to explore the reverse mortgage option as a way to increase their retirement income,” David Rae, a financial advisor, wrote in a Forbes article. “Doing so means the elimination of a mortgage payment, assuming payments are still being made, and the ability to receive a portion of your homes equity.”
What Is A Reverse Mortgage?
A reverse mortgage is a loan that is a home equity conversion mortgage (HECM) that is available to seniors age 62 and over. Reverse mortgages allow retirees to get a surge of money that takes away mortgage payments and is repaid after you pass or sell your home and move out. There are a few ways you can receive and budget money via a reverse mortgage loan.
- Lump Sum Payment: This is when you get all the loan money at once after qualified for a reverse mortgage. Not a bad option for retirees, but if you spend all the money unwisely, you don’t get more unless you sell your home.
- Term Payment: This reverse mortgage payment option allows retirees to get a monthly check per month for a set period of time.
- Tenure Payment: Similar to the term payment, retirees still get a monthly payment, but instead of it having a set term of time, it is based on your age and the life expectancy of 100 years of age.
- Modified Term Payment: This payment plan is a hybrid of tenure and term with a line of credit attached. This is great for building credit funding with a set monthly payment. Not bad for retirees that may not be retiring full-time, but opting to start a business instead.
Now that you know the different ways to receive your reverse mortgage loan, let’s cover the benefits and how you can upgrade retirement with extra money, whether getting monthly payments or one lump sum payment.
Top 3 Benefits Of A Reverse Mortgage
1. You Are Cash Rich
Having enough money for retirement is one thing. Having enough money to last the duration of your retirement is totally different. There is also the factor of having cash to maintain the standard of living you worked so hard to achieve throughout your working career.
A reverse mortgage can make that happen, because you will get an injection of cash to ensure you live well as a retiree. Since you will not have to make mortgage payments, besides taxes and other bills, you can pay down debt, increase your lifestyle, travel, and more.
2. Your Reverse Mortgage Loan Can Go Up In Value
One of the biggest benefits of a reverse mortgage is that the value of the loan can go up over time. Since the average retirement can last over 20 years, it can be challenging to ensure you get enough funds for your retirement money to last the test of time.
However, if you choose the tenure/term payment with a line of credit option, the money you use can increase year-over-year. For instance, you may have a line of credit of $100,000, but after 20 years it very well could be in excess of $300,000. This is good for retirees.
3. You’ll Have Money Forever — If Done Right
The last top benefit of a reverse mortgage to upgrade your retirement is that you will always have money. This is important, since the state of social security payments for seniors is kind of up in the air.
A reverse mortgage allows you to delay social security payments until you actually need it. This is important if you have an unexpected medical issue and need to use your reverse mortgage loan to pay it off. With a decline in cash, you can than let your social security kick in to cover the rest of your retirement.
Wrapping Up . . .
A reverse mortgage is an option for seniors over 62 with a home to use as loan leverage. It may not be the best option for everyone, but there are certainly benefits, ensuring that you can enjoy life as a retiree. You deserve it. What is your retirement plan?