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Best and Worst Uses of A Reverse Mortgage



Summary: Thinking of taking out a reverse mortgage? Great decision! But make sure you know the right ways of using a reverse mortgage before signing the deal.

 A reverse mortgage gives you an opportunity to use up the equity of your home to attend to your retirement needs. You can contact any reverse mortgage lender through reverse mortgage leads and find out how much you can borrow. The best part is that you can use up the money and still be the owner of the house where you stay.
Reverse mortgage can be used for various purposes. However, there are some worst uses that you may want to avoid. Here is a lowdown on the best and worst uses of reverse mortgage loans:

Best Uses of Reverse Mortgage

Pay off your existing debts

Most senior home owners take out reverse mortgages to pay off their existing home loans, credit card debts, medical bills, or car loan. But if the income that you get through reverse mortgage does hardly anything to repay your debts you might be better off selling your house.

Finance living expenses

The best use you can make of a reverse mortgage is to supplement your income after you retire. You can pay for any of your necessities including medical services, home repairs, home medical equipment, dental work, or at-home care. You can even use the money to buy some clothes or get a few specialized beauty treatments done.

Help with financial planning

Most senior homeowners see reverse mortgage as an excellent financial planning tool. You can use it to delay your social security benefits or preserve your other assets. You can set up a credit line and use it as you want. You can also use it to lower your income earned from other sources so that you don’t have to pay any tax on the social security benefits that you get.

Paying to downsize or upsize

If you wish to upsize or downsize in order to relocate closer to your family or friends, it would be a good idea to take out a reverse mortgage loan. Even if you are getting divorced a reverse mortgage loan can help you sell your current home and buy a new home that fits your individual needs.

Worst Uses of Reverse Mortgage

Gifting money to children

If you can’t see your children or younger generations struggle to repay their student loans or accumulate the down payment needed to buy their dream house, you can use your reverse mortgage money as a gift that you can give them. However, before doing so, make sure you don’t run out of money during your lifetime. If you do there is no guarantee that your children or younger generation will provide for you. This is why many seniors make it a point not to tell their children about the reverse mortgage loan they have taken.

Buy an annuity

Annuity is an insurance that will provide you a monthly payment for the rest of your life. In exchange for this you will have to pay an upfront premium. Most senior homeowners decide to take out a reverse mortgage in order to pay this premium. But it could be risky to use up the equity of your home on something that is so unpredictable.
A reverse mortgage could be a very valuable financial resource that can help you throughout your retirement. Make sure you use it wisely.

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