Four ways to use your reverse mortgage payments

A Federal Housing Administration reverse mortgage is available to certain homeowners over the age of 62 and can be used to meet the needs of seniors in a variety of financial situations. Some people may be hesitant to apply for this type of equity conversion program because they think it sounds like borrowing for a home or some other financial decision that could create debt. Instead, funds raised with a Home Equity Conversion Mortgage (HECM) use only equity accumulated in a home. Instead of a last resort for trying circumstances, a reverse mortgage can be suitable for solving many common financial problems.

extra income

Pensions and retirement funds provide resources for those who have prepared for retirement throughout their careers. Due to living conditions, not everyone can live on these resources and the fruits of other investments. A reverse mortgage is a common way to supplement other sources of income. Seniors do not need to take a greeter or cashier job if they have an accumulation of wealth in the form of home equity. It’s important to be able to live comfortably after decades on the hamster wheel.

health spending

Even those who feel well prepared for retirement can be caught off guard by rising healthcare costs, especially when unforeseen medical issues arise. Diagnosis, treatment and longer hospital stays are just one aspect of the potential costs. Chronic conditions can mean years of expensive prescriptions and some level of ongoing medical care. Dialysis treatments, diabetes testing supplies, and other large medical expenses are more than just one-time expenses. In fact, a single diagnosis can completely change a couple’s outlook on retirement.

pay off debts

While credit cards are convenient and sometimes necessary, interest rates can be especially problematic for those who no longer work full-time. Whether they’ve spent money on grandchildren, family reunions, or practical expenses like utility bills, many seniors have debt that needs to be resolved in a timely manner. Managing financial matters is one way to minimize the mess left behind after death, but it also has the practical benefit of helping creditors avoid confiscating family heirlooms and other valuables.

Financing of renovations

Every homeowner knows that some maintenance projects are investments and save money in the long run. Likewise, renovations such as ramps for better accessibility may be needed as the residents of the home get older. After all, for many seniors, retirement means more time at home, and there’s no point in procrastinating on projects that have been put off for years. A HECM can be used to cover the cost of renovations without charging other accounts or saving on living expenses.

Homeowners should be aware of the many uses of a reverse mortgage. Rather than relying on a pension or cash flows from investment returns, a HECM allows homeowners to live more comfortably and solve financial problems by drawing on accumulated equity.