A reverse mortgage is helpful for many because it helps provide financial flexibility. It turns the equity you’ve built in your home into spendable, liquid funds. When you qualify for one, you can not only choose how you receive your money but you can also spend it on pretty much anything you’d like. This makes it a very beneficial tool for those who are retired, on a fixed income, or generally need access to money. In today’s blog, Family Home Loan Texas discusses the ways you can spend your reverse mortgage funds.
A Refresher
Before discussing the various ways you can spend your reverse mortgage funds it is important to talk about the basics of this helpful loan because there is a lot of misinformation out there. For starters, it is available to those who are 62 or older. It must also be taken out on your primary residence, which means it is the place you spend at least half of the year. When you do qualify, you can choose to receive your money as a lump sum, monthly payments, or a line of credit. Whichever you choose will likely have some bearing on what you end up spending your money on. It is also important to note that you will never be kicked out of your home, which is exceedingly rare. This only occurs if you stop paying property taxes or your house ceases to be your primary residence. Even if these situations do come up, you will still be able to pay back the loan. Overall, it is a great financial tool for those that are 62 or older, as it can free up funds for important expenses
Spend Your Money On Home Repairs
Fixing up one’s house is a common way people use their funds. Many people old enough to qualify have been in their homes for a long time. They have a lifetime of memories filling every room, and they value the space and peace their house has provided. But, over time, homes start to need repairs — some small, some large. While many might be able to keep up with the smaller maintenance needs, larger repairs can require a lot of money that simply might not be available. Because of this, using a reverse mortgage to pay for home repairs and renovations is exceedingly common. Even if you think you have the necessary funds for repairs, it is very easy to go over budget, so having an extra financial cushion provides helpful peace of mind. Additionally, making repairs to your home also increases its value, so if you do decide to move and sell your house, you will likely have leftover money once you pay back the loan.
Cover Medical Expenses
Even with insurance or Medicaid, medical expenses can add up quickly. It is unfortunately easy to blow through emergency savings, and when you do, you might not have enough money to pay for the necessary treatments you or a loved one needs. Because of this, a reverse mortgage is a great way to pay for medical procedures or cover unforeseen costs that insurance doesn’t cover. It can also provide peace of mind because you will be able to pay for whatever you need without going into debt. When you can pay for everything upfront, you won’t have anything hanging over you. While you will eventually have to pay back your reverse mortgage loan, you won’t have to do so until you move out of your primary residence, so you remain completely in control of when you will repay it. It is also important to note that you will never have to pay back more than your home’s value, so you can rest easy knowing exactly what you will be responsible for.
Generally Plan For The Future
Even if you do not have immediate expenses to cover, you can still take out a reverse mortgage loan and receive a line of credit. This is particularly attractive because you will not have to pay any interest on funds you do not use. This allows you to know you will be able to pay for future, unforeseen expenses without worrying about where you will get the money from. Again, with a line of credit, you do not have to use any of it if you choose not to, so it is a fantastic way to keep your options open should anything pop up unexpectedly.
A reverse mortgage is also a great way to hold off on taking money from your 401(k). Withdrawing money early has a tax penalty, and the longer you keep your money in this investment fund, the more you will make. Because a reverse mortgage is considered a non-taxable income, you will be keeping more money than you would if you withdrew the same amount from your 401(k).
The Money Is Yours To Spend How You Want
While the above suggestions are common ways to spend the funds you receive from a reverse mortgage, you are free to spend them however you would like. Many choose to help others; they can help pay for a relative’s tuition or a down payment on their first house. You can also donate it to the charitable cause of your choice. Whatever you choose, make sure you do not spend it all before you may need it for more serious causes. Before you can get this type of loan, you will meet with a HUD-sponsored, independent counselor that will describe all aspects of it, so you will know exactly what to expect moving forward. You want to go into a reverse mortgage with as much knowledge as possible, so you will be able to make the most from it.
Contact Us To Learn More About Reverse Mortgages
We are here to help you achieve financial flexibility. Family Home Loan Texas was founded by loan originator and long-time mortgage professional Rob Bramer. Rob has helped clients secure the loans they need both locally and nationally and can help you get the loan you need to live life on your terms. Call 1-800-990-LEND (5363) to speak with Rob about a reverse mortgage loan and to receive a free, no-commitment consultation.