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The best times to get a reverse mortgage
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According to the latest Consumer Price Index report, inflation once again ticked upward in March. Persistent inflation makes it challenging for Americans to manage their expenses, and that’s especially true for seniors who are no longer in the workforce or are living on fixed incomes.
On top of that, elevated interest rates, combined with limited retirement income, make it harder for seniors to qualify for home equity loans and other forms of financing to ease their burden. In this environment, many seniors are turning to alternatives, such as reverse mortgages, to borrow money.
A reverse mortgage can help qualified homeowners convert some of their home’s equity into much-needed cash to pay off debt or live more financially secure in retirement. While reverse mortgages aren’t for everybody, they can be beneficial in certain situations.
Compare your top reverse mortgage loan options online today.
The best times to get a reverse mortgage
Let’s examine a few of the best times to consider getting a reverse mortgage.
When you don’t have enough income to pay your bills
Many seniors have significant equity in their homes after paying down their mortgage over time, especially if home values have increased. Unfortunately, many of these same seniors struggle to meet monthly expenses.
“A reverse mortgage is tailored precisely for situations like this,” says Rose Krieger, senior home loan specialist at Churchill Mortgage. “It eliminates the requirement of monthly mortgage payments, offering borrowers potential cash returns or a line of credit based on their equity.”
“The best part is you do not have to make any monthly payments, and you will never owe the lender more than the value of your home. You pay off the reverse mortgage on the home when you sell or through your estate when you pass,” Rebecca Awram, a mortgage advisor at Axiom Mortgage Solutions and Seniors Lending CentreMortgage Advisor at Seniors Lending Centre, notes.
Explore how a reverse mortgage could benefit you during retirement.
When your home equity is greater than your loan balance
A qualified homeowner can use proceeds from a reverse mortgage for several reasons, such as:
- To receive supplemental income during retirement
- To access your home equity without the immediate need to sell your home
- To pay off debt, cover medical expenses, fund home renovations or meet other financial needs
- To create room in your budget for unexpected expenses and financial emergencies
You can even use a reverse mortgage to pay off your home loan.
“When a borrower closes on their reverse mortgage, the first thing that happens is any existing mortgages are paid off,” says Michelle White, a former loan officer and current national mortgage expert at The CE Shop. “The borrower can then access any remaining equity. The equity can be disbursed in a lump sum or regular monthly payments. The borrower may choose to establish a line of credit or choose a combination of any of these disbursement types based on their financial goals and needs.”
When you don’t have beneficiaries
A reverse mortgage may be a better option for seniors to tap into home equity for their financial needs if they don’t have beneficiaries. In this case, they don’t have to consider beneficiaries’ interests or preserve the home’s value for an inheritance.
“A senior without beneficiaries will not have to worry about planning who will pay off the reverse mortgage after they pass as if you inherit a property with a reverse mortgage, it is your responsibility to pay it back,” Awram says.
When a reverse mortgage may not be a good idea
While these mortgages can benefit seniors in a variety of ways, it’s critical to understand the downsides of reverse mortgages before proceeding with one. Everyone’s financial situation is unique, after all, and a reverse mortgage may not be suitable for all situations.
For example, you might not want a reverse mortgage if you or your spouse is younger than age 62. All borrowers on a reverse mortgage must be at least 62 years old to qualify. If one borrower’s age is below the threshold, they may have to be removed from the property deed so the older borrower can qualify for the reverse mortgage. However, this can be a risky move since mortgage disbursements will stop once the older borrower passes away, and they might lose the home if they can’t pay off the loan.
And, a reverse mortgage may not be ideal if you can’t keep up with ongoing homeownership costs. While you’re not usually required to make monthly payments on your reverse mortgage, you do have to properly maintain your home and pay property taxes, homeowners association dues and other property-related expenses. Failing to do so or living away from the home for 12 months or longer could cause the lender to foreclose on your property.
The bottom line
Taking out a mortgage is a serious decision, so it’s crucial to consider the benefits and downsides before getting a reverse mortgage. You might consider consulting your financial advisor or tax accountant to make sure a reverse mortgage aligns with your overall financial plan and goals.
However, a reverse mortgage may be a good option in certain situations because it allows you to access your home’s equity as cash to reduce strain on your budget and achieve a more financially stable retirement. So, it may be wise to get quotes from several of the best reverse mortgage companies to find the option that most fits your needs.
CBS News
Floods, landslides struck parts of Bosnia as residents slept, leaving at least 16 dead and several missing
A severe rainstorm struck Bosnia overnight Friday, killing at least 16 people in floods and landslides in several towns and villages in central and southern parts of the country, with surging waters rushing into people’s homes as they were sleeping.
Rescue services in the south said several people were missing and called on volunteers and the army to assist as roads were closed and houses left without electricity.
Josip Kalem, a resident of Fojnica, one of the towns hit by the floods, said his dog’s barking woke him up at around 4 a.m. When he came out on the terrace, he saw the water rising rapidly.
“I came down, woke up my wife, and we looked around, we could not get out of the house. We saw more and more water coming in,” he said. “All of a sudden, the water was flooding the garage, basement, my car — everything. The water swept it all away, including my dog. Flood took it downstream.”
Andja Milesic, another resident of Fojnica, also said she was caught by surprise in the middle of the night.
“When I woke up, my bedroom floor was already soaked. I walked into the hallway — water was everywhere — the living room, everywhere,” she said. “It was horrible.”
Armin Durgut / AP
Darko Juka, a spokesman for the local administration, said at least 14 people had died in and around the southern town of Jablanica. Officials later said two more bodies have been found.
“Those are the ones who have been discovered by rescuers,” he said. “We still don’t know the final death toll.”
“I don’t remember such a crisis since the war,” Juka said referring to the 1992-95 war in Bosnia that left the country in ruins. “The scale of this chaotic situation is harrowing.”
Defense Minister Zukan Helez told N1 regional television that troops have been engaged to help and that the casualties were reported.
Helez said that “hour after hour we are receiving news about new victims. … Our first priority is to save the people who are alive and buried in houses where the landslides are.”
A pregnant woman lost her baby after she was rescued from the floods and transferred to a hospital in the regional center of Mostar. Authorities said doctors were fighting for her life as well. Separately, a child was successfully rescued and hospitalized, local officials said.
Rescue services in the towns of Jablanica and Kiseljak said the power was off overnight and mobile phones lost their signal.
The Jablanica fire station said that the town was completely inaccessible because roads and trainlines were closed.
“The police informed us that the railroad is also blocked,” the state rescue service said in a statement. “You can’t get in or out of Jablanica at the moment. Landline phones are working, but mobile phones have no signal.”
It urged people not to venture out on the flooded streets.
Human-caused climate change increases the intensity of rainfall because warm air holds more moisture. This summer, the Balkans were also hit by long-lasting record temperatures, causing a drought. Scientists said the dried-out land has hampered the absorption of floodwaters.
Armin Durgut / AP
Drone footage broadcast on Bosnian media showed villages and towns completely submerged under water, while videos on social networks showed dramatic scenes of muddy torrents and damaged roads.
One of the busiest roads linking Sarajevo with the Adriatic coast via Jablanica was swept into a river, together with a railway line in a huge landslide, according to photos.
“Many people are endangered because of big waters and landslides. There is information about victims and many injured and missing persons,” said the civic protection service.
Authorities urged people to stay on the upper floors of their homes. Reports said surging waters swept away domestic animals and cars as the water swiftly filled up lower floors of buildings.
The heavy rains and strong winds were also reported in neighboring Croatia, where several roads were closed and the capital of Zagreb prepared for the swollen Sava River to burst its banks.
Heavy winds have hampered traffic along the southern coast of the Adriatic Sea, and flash floods caused by heavy rain threatened several towns and villages in Croatia.
Floods caused by torrential rains were also reported in Montenegro, south of Bosnia, where some villages were cut off and roads and homes flooded.
In 2014, floodwaters triggered more than 3,000 landslides across the Balkans, laying waste to entire towns and villages and disturbing land mines leftover from the region’s 1990s war, along with warning signs that marked the unexploded weapons.
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