What Can Reverse Mortgage Funds Be Used For?
How To Use Your Home Equity To Upgrade Your Home, Lower Your Taxable Income, And Help Your Loved Ones.
"How can I use a reverse mortgage? Are there limits?"
Are you the independent type? Do you value freedom? A reverse mortgage is perfect for you if you value the idea of spending your funds without limits.
So, the short answer is that the proceeds from your reverse mortgage can be used to fund anything. There are no restrictions on what you can use the money for.
This is your money, and you can use it in any way you like. Below are a few common uses for reverse mortgage funds.
Paying Your Bills
How would it feel to have a little extra money at the end of the month? Without a single monthly payment required(1), a reverse mortgage will allow you to redirect the money you would use to pay the traditional mortgage toward other things. This can include your everyday expenses, your bills, your credit card balance, or other debts.
Paying for your healthcare costs
A reverse mortgage can help you “age in place” (remain in your home). You can avoid being placed in an assisted living facility or senior community
Help you plan for a better future
Build your “future financial safety net”, and ensure financial protection in uncertain times. Your reverse mortgage loan can allow you to set up a line of credit. This can perpare you for sudden expenses, or even pay for long-term care.
Pay for home upgrades and repair
Improve your qualify of life by upgrading and/or repairing your home. This can help you remain in your home longer.
Reduce taxable income
Replace the money in your 401(k) or other retirement plan with the tax-free cash from your reverse mortgage(2).
Help your loved ones
You can use the cash from you reverse mortgage to make a difference in the lives of those you care about the most. How about helping a child or a grandchild pay for college tuition, or a down payment on their first home?
(1) Real estate taxes, homeowners insurance, and property maintenance required.
(2) Consult a financial advisor and appropriate government agencies for any effect on taxes or government benefits.
“I am more than satisfied with Brian’s help. I got the Line of Credit set up to receive the money, and it was sent straight to my bank account. No hassle. This was exactly what I wanted. Thank you Brian… Tyler-Jay Whittaker”
"Sounds good, but how can I be sure it’ll work for me?"
Not everyone can qualify. Only qualified borrowers aged 62 and older can take out a reverse mortgage loan (due to FHA underwriting requirements).
At Crown Reverse Mortgage Financial, we pledge to assess your financial situation to ensure that it’s a good fit for a reverse mortgage. We’ll take the time to ask questions about your goals, your home, and your finances. You can rest assured that if we ever feel like this is NOT the best option for you, we will tell you so. Not all lenders can make that promise.
It’s a good idea to gather information and explore your home-equity options early on, so you can discuss important financial decisions with family or advisors you trust. Crown Reverse Mortgage will provide you with the facts and information you need to decide if it’s right for you.
Do you need to tap into your home equity now or should you save it for an emergency?
We understand that choosing to access your home equity is a big decision. It used to be the case that most homeowners were advised to save their home equity for emergencies.
However, recent studies from the Journal for Financial Planning has concluded something completely different. Accessing the equity of your home at an earlier date, and retirement funds at a later date, might be better to help extend the life of your assets.
You see, setting up a credit line for future use can be a great way to protect yourself from downturns in the real estate market and ensure that the equity you have today will always be available when you need it.
Are you on a fixed income with no other assets?
Make sure that your income will allow you to keep paying your homeowner’s insurance and property taxes. Otherwise, you could face foreclosure. It’s wise to have a plan for how you’ll keep paying your expenses.
How long do you and your family plan to live in the home?
If you plan to live in your home for the next 3 to 5 years, a reverse mortgage could be the right choice. You are protected by the FHA mortgage insurance, in the situation that your loan grows to be bigger than your home is.
Just remember that the FHA mortgage insurance costs money. It can be an expensive choice to borrow money through a reverse mortgage, if you don’t plan to stay in your home for atleast 3 years from today.
Would your spouse or partner want to keep living in the house without you?
It’s vital to carefully discuss this question as a couple. Are you married? First, have a conversation with your lender. Together, you can find out if your wife or husband qualify as what’s known as “an eligible non-borrowing spouse”.
When the last surviving borrower has passed away, the non-borrowing spouse can stay in the home. He/she can at that point After the passing of the last surviving borrower, an eligible non-borrowing spouse can remain in the property. She/he can also postpone the reverse mortgage from becoming due and payable.
However, the non-borrowing spouse will not be able to access the funds in the reverse mortgage (which were available to the borrower). They must also keep meeting the requirements for the loan. This includes paying for insurance and taxes taxes and insurance, and maintaining the property. This has to be done to prevent the reverse mortgage loan from being called due and payable.
In the case that your spouse is deemed ineligible, he/she will not receive a deferral period. That means the the loan will become due and payable after the passing of the last surviving borrower.