Retirement is a time for comfort and contentment. However, sometimes life happens and we need to adjust. When financial stability is the concern, looking into assets as an alternative can be a very functional and secure option.
Within those asset opportunities are branches of different financial support. Most often though, reverse mortgages and refinancing become the final two options for individuals late in their retirement.
Reverse Mortgage Circumstances
While there are strengths to both, reverse mortgages do lend themselves to individuals in some or all of the following circumstances:
Over 62 Years of Age
All reverse mortgages require that borrowers are at least 62 years of age. This threshold is standardized by the federal government to coincide with other retirement support and services, like social security benefits.
Refinancing does not have an age requirement. However, because it is not federally insured or reinforced this introduce be a more challenging burden for borrowers.
Varied Payout Options
This type of financing also allows for several different kinds of payouts. Unlike refinancing, reverse mortgages offer flexibility for the borrower to decide what plan will work best for their situation.
Among these options are the following payout options: Lump Sum Payment, Line of Credit, Fixed Monthly Payments, or any combination of these. Considering what your needs are as well as the terms of these different opportunities gives the lender more resources for the borrower and provides the borrower the leniency to self-select based on customization.
Where refinancing holds a higher initial expectation of the borrowing party, reverse mortgages are more lenient. Reverse mortgages do not require a minimum credit score nor do they have the added pressure of monthly payments. In doing so, they are simpler in terms of the structuring and related fine print. This allows more seniors the opportunity to live their lives in their homes more comfortably.
Long Term Residency
With regard to living in your home, reverse mortgages are also suited toward individuals that plan to live in their home for the foreseeable future. This is not to dissuade individuals that are considering relocating but there are stipulations within the reverse mortgage agreement that require the primary borrower to reside within the home. For those that are confident they will maintain, care, and manage their residence and property for 5 -10 years in the future, reverse mortgages can offer a sturdy and comfortable opportunity.
Seniors living alone or residing as a sole property owner are also strong candidates for reverse mortgages. Where refinancing a home as a single owner can be stressful, the cash flow brought in from reverse mortgages can actually alleviate certain stressors.
Reverse mortgages also allow homeowners the satisfaction and legality of owning their home through the term of the loan. This provides the peace of mind that cannot be found in alternative or senior living facilities. Refinancing can muddy the waters between loan transitions as well as complicating terms of payments, interest rates, and potentially ownership.
Fortunately, the decision is yours! Researching all of your options will provide you with the best information available. Look through some of details listed above as a foundation for this extended investigation. Ultimately, speaking with a reverse mortgage specialist with a commitment to clients and industry progress as well as alternative loan professionals with similar values will initiate the process, whatever pathway you choose.