Despite the old wisdom, some financial experts think there are good reasons why you might want a reverse mortgage during retirement. This loan is no longer just a last resort. It can also be a smart financial move that helps you enjoy your golden years in style. Here’s a look at a few good reasons to make the deal.
5 Reasons You Might Want a Reverse Mortgage During Retirement
- Escape the impacts of a tough market: The market tends to go up and down in ways that don’t indicate the real value of your portfolio. If you sell your retirement investments during a down period that could be very bad for your retirement. Pulling money out of your house through a reverse mortgage can give you income to live off until the market recovers. This way you don’t have to delay retirement just to protect your portfolio.
- Delay collecting social security: Delaying signing up for social security will mean you get a bigger check, but not everyone can afford to do that. A reverse mortgage can give you the income you need, so that you can wait and get the most out of this government benefit.
- Roll over your traditional IRA: One savvy retirement move can be rolling your traditional IRA into a Roth IRA to create tax-free income for your future. The issues here, however, is that you must pay taxes upfront. A reverse mortgage is one sensible way to afford this move.
- Diversify your assets: While it’s true that you’ll have to make interest payments on a reverse mortgage, keep in mind that when you own a home you have a large portion of your assets tied up in just one piece of property. It can be wise to pull that money and put it into more diversified investments to safely leave an inheritance for your heirs.
- Safety money for emergencies: Having a line of credit from a reverse mortgage can give you the liquidity you need in case you must pay any emergency expenses such as healthcare.
The days of only using a reverse mortgage as a last resort are past. While you should still treat this loan with caution, these are all good ideas for times when you might want to put the value of your home to good use.