Decades ago, reverse mortgages were generally taken out by property owners who were 70 years of age or older. But even if you aren't in your 70s or 80s, a reverse mortgage may still be the best financial option for you.
Today, many borrowers in their 60s are starting to look at reverse mortgages as a path towards financial stability and freedom. Those who take out a reverse mortgage only need to be 62 or older to qualify, which means many can qualify even before retirement.
The Advantages of Taking Out a Reverse Mortgage Younger
There are a variety of benefits to taking out a reverse mortgage in your younger years. For example, you can:
- Get access to the funds that you need — easily. A reverse mortgage doesn't require that you go through a credit check or that you have any equity other than your home. If you need money for medical bills or simply living expenses, a reverse mortgage can help immediately.
- Avoid selling your home. If you need cash and own property, your only choice is often to sell your home — and that leaves you without a place to live. A reverse mortgage lets you keep your independence and live within your home, while still being able to get cash now. With a reverse mortgage, you'll still own your home.
- Buy yourself time. Many people find that retirement is more expensive than they realize. A reverse mortgage will give you the time to figure out your financial situation and create a sustainable, long-lasting solution.
- Give yourself financial flexibility. If you're thinking about moving in the future or want to create a retirement lifestyle for yourself, a reverse mortgage can give you the cash you need to invest in it now. The cash that you get through a reverse mortgage can be used for anything, just like a personal loan.
Even if you think you may be too young, keep these advantages in mind.
Reverse Mortgages Are Growing in Popularity
Reverse mortgages are becoming an extremely popular option for younger homeowners. Boomers, aged 62 to 64, are now over a fifth of those who are taking out reverse mortgages. For the most part, this is because:
- Boomers aren't afraid to take on debt. A reverse mortgage is just another financial instrument, and boomers have been able to wisely take advantage of these types of financial instrument for a variety of purposes: funding college tuition for family members, taking dream vacations, pay medical bills and renovating other homes. With interest rates low, this debt can be extremely useful to leverage.
- Boomers need help in their retirement. Many boomers have found that they simply were not able to save up enough for their retirement, especially due to housing market and investment crashes. Having cash can be preferable to having a property investment, especially for those who need money for their expenses now. Many boomers are still working and consequently are still shoring up their cash reserves; a reverse mortgage takes some of the pressure off.
- Boomers may need to downsize. Downsizing a home is easy with a reverse mortgage, as the funds from the reverse mortgage can be used immediately to purchase a smaller home outright, while still retaining ownership of a new home. For many families, this can be an ideal situation, as it allows multi-generational families to keep control of their property.
Of course, taking out a reverse mortgage at a young age does mean that you may run the risk of depleting your cash reserves earlier. It all depends on your own unique financial situation.
If you aren't certain whether a reverse mortgage may be the right option for you, contact Retirement Funding Solutions today. We can walk you through the process and what it could mean for you and your family.