Many people who are retired and own their own home may be thinking of using a reverse mortgage to pay for their living expenses. Reverse mortgages are fairly new. In a reverse mortgage you can cash out the equity in your house while you still live there. Some banks open this as a revolving line of credit that you can write checks on. Others will deliver an amount to you each month.
In order to qualify for a reverse mortgage you must be at least 62 years old. It may seem like a good way to get a little bit of money to help pay for daily expense once you have retired, but you should carefully consider your options before you do this. You are cashing out the equity in your home, and this can be a risky prospect, when you are in retirement.
If you feel that you may need more money to live on you may consider downsizing. You can sell your home and move into a condo where most of the maintenance is provided for you. This can help when it comes to budgeting the cost of upkeep for your home. You can then use the money that you have leftover to further finance your retirement needs.
If you have a parent who is considering this option, you should make sure that they understand fully what they are deciding to do. With a reverse mortgage, the home will go to the bank, and not to the family. This can be difficult if family members are attached to the home.
It is important to begin planning and saving now for retirement, so that you are not faced with these decisions as you grow older. It is difficult to struggle after you have retired. It is important to help your parents as much as you can, and prepare so that you are not a burden on your children.
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