One of the greatest benefits of the reverse mortgage is flexibility. Whether you’re looking for an extra cushion for your retirement funds, trying to get rid of your existing mortgage, or seeking to purchase a new home with a HECM for Purchase, the reverse mortgage offers incredible flexibility. No matter what your retirement plans look like, a reverse mortgage may be able to enhance your future financial situation. But, like many things in life, timing is important. When should you get a reverse mortgage – and why?
While external factors like interest rates and housing prices do matter, your own personal situation takes precedence. There are good times to get a reverse mortgage, and there are great times to get one – hopefully, the following advice will help you identify the perfect time for you to get a reverse mortgage.
The Early Bird Gets the Worm
At first glance, it may seem like the reverse mortgage is more beneficial for older borrowers. After all, older borrowers will be able to access a greater portion of their home’s equity in the beginning. However, immediate cash isn’t the only purpose of this loan. With an adjustable rate HECM line of credit, you have a wide array of options for your money. You could choose to take the money as a lump sum or receive monthly disbursements to assist with immediate expenses while also allowing your other investments more time to grow in value.
Or, you could also leave your line of credit alone. By doing so, the unused funds will increase in value over time and give you more money to access in the future. Furthermore, these funds will not waver based on your home value. This means that they can act as a stable source of money that you will be able to access when you need it. The earlier you establish your line of credit, the more time it will have to grow in value, and that’s why it can be very useful to get a reverse mortgage as soon as possible.
What If You Need the Money Now?
While the HECM line of credit is a great tool for long-term planning, sometimes the money from a reverse mortgage is needed immediately. For example, if you want to pay off your mortgage, stay in your home, pay off an expensive medical bill, or handle other major obligations, you may need access to a great deal of money in a short amount of time. If this is the case, then it would make the most sense to simply get a reverse mortgage as soon as possible. While there are other financial options that you may be able to access depending on your financial situation, getting a reverse mortgage can be a relatively quick way to access a lot of funds depending on your home equity.
Pay Attention to Current Economic Trends
Although your financial situation will likely have the greatest effect on your decision, there are various external factors and economic changes that you may want to take into account. For instance, it may be worthwhile to pay attention to fluctuations in home values. When your home is more highly valued, the amount of proceeds you may be able to receive from a reverse mortgage is also higher. Similarly, when interest rates are low, you could get access to more money from a reverse mortgage. With interest rates as low as they are right now, it’s a good time to get a reverse mortgage before rates change significantly.
Ask Yourself Important Questions
In the end, your decision to get a reverse mortgage should involve multiple factors. How much money will you be able to receive? Do you intend to use the loan for short-term or long-term purposes? Which type of reverse mortgage is most suitable for each goal? Is a reverse mortgage right for you at all, or would another solution be more effective? All of these questions will require a bit of research, which is why it would be helpful to speak with one of our licensed specialists and a financial advisor if you are interested in a reverse mortgage.