Once upon a time Americans could count on three resources to fund their retirement: Social Security, pension income and individual assets.
But the number of companies offering traditional pension plans has shrunk dramatically in the past 30 years. Thousands of retirees looking for an alternative revenue stream have turned to reverse mortgages to supplement their Social Security.
Reverse mortgages can be an important tool for seniors who want to stay in their home and be able to access their equity.
To qualify for a reverse mortgage, applicants must be at least 62 years old, plan to remain in your home and have no or a low mortgage balance
Reverse mortgage holders receive payments from the lender either over time or all at once, but they are not for everyone. Here are some things to consider. The homeowner still pays taxes and insurance and upkeep. And you should beware of high fees and interest.
A reverse mortgage makes more sense if you plan to stay in the home longer than a few years due to the high upfront costs of the loan. And according to financial advisor Paige Gunn with the Harwood Financial Group it is not for seniors who want to pass the home onto family members when they die.
Gunn, whose company does not sell reverse mortgages, says those who opt for a reverse mortgage should set it up as a lifetime benefit versus a lump sum so that there is money for ongoing medical bills and expenses.
For more information you can contact AARP at aarp.org/revmort or HUD at 800-569-4287.
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