June 5, 2017
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posted by
Dave Marr
Category: Reverse Mortgage
Reverse mortgages, also known as HOME EQUITY CONVERSION MORTGAGES (HECM) tend to have a bad rap. Our goal at Catalyst Lending is to provide clear-cut, reliable information regarding financing options for the individuals who make up our communities - which is why we wanted to take some time to clear up common misconceptions regarding reverse mortgages. Read on for the five main reasons you should reverse your thinking on reverse mortgages today.
1. Today's Reverse Mortgages Are Not Your Parents' HECM
Many believe that reverse mortgages are simply a last-resort option for desperate homeowners. Though this conception still lingers, it's simply not true. As our lifespan increases, reverse mortgages are becoming a popular (and strategic) option for homeowners from all walks of life. A reverse mortgage no longer means you're financially desperate or "house poor;" it means you're a homeowner looking for a proactive, common-sense solution for maintaining your financial security and freedom during retirement. Today's reverse mortgages allow for the excitement of beginning the next chapter of your life - without all of the financial worry.
2. Today's Reverse Mortgages Offer Freedom, Security and Control
Humans are living longer, and our health-care costs are increasing. While retirement used to last 10 years, it now lasts anywhere from 20-30 years. This means that outliving retirement savings and facing mounting health-care bills are serious risks mature homeowners face. Think of your home as a pension or annuity you already own - tapping into your mortgage as a resource to help negate those inherent risks is a financially savvy move. According to Kiplinger, "It would be foolish not to consider one of the largest stores of wealth, their home, as part of their retirement income plan." When we realize mortgages are nest eggs we've created, HECMs suddenly become a common-sense option for keeping up with things like health-care bills, debt and the rising cost of retirement.
3. Today's Reverse Mortgages Allow You to Maintain Your Standard of Living while Delaying Tapping Into Social Security
Maybe your retirement looks like traveling with your spouse. Maybe it looks like more vacations to see your grandchildren. Maybe it looks like weekend trips to the coast and endless morning hours spent at your favorite bookstore. Whatever it looks like, chances are it will last longer than you originally thought when you first started saving - which means depleting your social security benefits is a real risk. A reverse mortgage offers you an additional monthly income for the rest of your life - allowing you to delay tapping into those benefits, all while maintaining the standard of living you've worked so hard your entire life to achieve. After all, why forego living the retirement you've dreamed of when you have a perfectly viable, common-sense financing option right under your roof?
4. Today's Reverse Mortgages Allow You To Maintain Your Home
One of the greatest misconceptions surrounding reverse mortgages is that the bank owns your home after you get an HECM. This is completely false. In fact, you own your home and retain the title all throughout the entirety of the reverse mortgage. Plus, your non-borrowing spouse or partner can even continue living in the property after your passing or relocation.
5. Today's Reverse Mortgages Mean You Can Leave Behind The Legacy You've Dreamed Of
People tend to believe that an HECM means your family can no longer inherit your home. This is false. Your family can, of course, inherit your home upon your passing or relocation. Plus, no monthly mortgage payments for life (plus an additional monthly income) means you now have some financial wiggle room to begin building upon the legacy you've always dreamt of leaving behind. You can donate to your favorite charities, invest in your grandchildrens' college funds or fix up your home - all by tapping into an annuity you already own.
Overall, today's reverse mortgages are entirely different from the reverse mortgages of our parents' time. They offer security, flexibility and control - all while allowing freedom for things like travel, home renovations or at-home health care if it's ever needed. Embarking on the next chapter of your life is an exciting time - and a reverse mortgage is simply a smart tool to allow you to begin that chapter on a note of excitement (as it should be), rather than one of worry. Remember, we're here to help you as you work to make decisions regarding your financial future and want to ensure you're considering every tool you have at your disposal - so long as it's beneficial for you, your family and your future.
If you're considering an HECM or want to learn more about reverse mortgages and proactively planning for retirement, contact us today. We can't wait to help you begin the newest chapter of your life...on the best financial foot possible.