More senior citizens are finding out that their lifetime’s worth of saving simply is not enough to fund their retirements. With people living longer, it is a real possibility that you could run out of money long before you die. When the idea of reentering the workforce or moving in with relatives to save and make money is less than ideal, you may wonder what your best option would be to bulk up your retirement savings. You can live comfortably without taking a job, moving in with your children, or going without the cash you need by taking out a reverse mortgage on your house.
Based on Home Equity
A reverse mortgage differs from its traditional counterpart in several keys ways. First, it lets you use perhaps your most valuable asset, your house, to get money you need today. A reverse mortgage is actually a line of equity offered by your preferred lender that reflects the value of your house. The lender pays you cash that is based on your home’s positive equity.
Second, a reverse mortgage does not require that you make regular monthly payments as you would on a traditional mortgage. You can stay in your home, receive the money, and not have to make payments or fear that you will be foreclosed on because of non-payment. Your home will be sold to satisfy the loan when you pass away, if you move, or you fail to comply with requirements like paying the taxes on your home or keeping it in good condition.
Use Money for Anything
Another important feature that comes with a reverse mortgage is that you can use the cash for anything. You can fund your retirement savings account, pay off credit card debt, pay for your medical expenses or hospital bills, take a vacation, or simply set it aside in case of an emergency. The money is yours to use as you see fit. You will not be restricted on its use.
No Impact on Social Security or Medicare Eligibility
You understand how cautious you must be to avoid going over the income restrictions set by Social Security and Medicare. However, the money from a reverse mortgage is not counted as income. It not need to be claimed on your income tax returns, nor will it affect your eligibility for Social Security or Medicare. It can, however, affect your eligibility for Medicaid, food stamps, or welfare programs. Nonetheless, if you rely on your pension and Social Security for your greatest sources of income, and Medicare for your medical expenses, you can be assured that your reverse mortgage should not affect your ability to claim either of those benefits.
Funding your retirement can be a challenge today. Even if you think you have enough money saved, you may be at risk of running out of money within just a few years. Because people are living longer today, it is crucial that senior citizens like you know your options for bulking up your retirement savings. You can use your most valuable asset and take out a reverse mortgage on your home to get the money you need to live on comfortably.