Most seniors have not used their home equity to
The forecast going forward is that even more seniors struggling to pay their bills will consider reverse mortgages next year. A survey indicates that more than 25% of seniors over age 65 are borrowing against their home or trying to sell the home to boost their incomes. Borrowing with a forward mortgage can be problematic because the loan has to be repaid and can mean additional cash flow problems in the future. Selling would be great in a rising market, but with today’s declining market, this may be the worst time to sell.
Depending on an individual’s or couple’s financial profile, there may be no need for a reverse mortgage. However, many seniors are at the point where a reverse mortgage makes a lot of sense. 50 to 75% of all seniors say that the current economic crisis has permanently damaged their retirement savings, it is the worst they’ve ever seen and they are making adjustments to their lifestyle as a result. As they do their homework, more seniors are beginning to realize that a reverse mortgage can reposition them to their desired state and for some it exceeds their expectations.
A reverse mortgage does not have to last forever. The home can be sold at a later time to pay off the reverse. Rather than sell your home in today’s declining market, a reverse mortgage could be used as a financial tool to weather the financial climate. The senior could wait to sell into a more favorable market. While the fees for the reverse mortgage must be considered, it may be a much better option than selling your house in a market bottom. Imagine a home that appraised for $200,000 one year ago that has lost 30% or $60,000 of its value. You should seriously consider a reverse mortgage before you allow yourself to lose that amount of money in what very well may be a market bottom.