Best Time to Get a Reverse Mortgage? Wait or Act Now?

You might be surprised by how many people are utilizing reverse mortgages. Borrowers come from a wide variety of socioeconomic backgrounds and ages range from 62 to 95 and older. One thing everyone struggles with is when is the best time to get a reverse mortgage.

While there is no one right answer, below are a few guidelines to help you answer this important question.

Good Times to Get a Reverse Mortgage

When You Need the Money — If you need money now and you want to stay in your own home, then a reverse mortgage can be a good solution.

A reverse mortgage helps borrowers in need in two key ways:

  • The loan eliminates your existing mortgage. This means that you will no longer have to make regular mortgage payments. This alone can dramatically improve your monthly budget.
  • In most cases, the loans can also give you access to cash or a line of credit. You can use the money to make ends meet, enhance your monthly spending or splurge on something you have always wanted. Many people use the funds to help with medical costs, remodeling, cover larger one-time expenses or purchases, or to help a loved one.

When Housing Prices Are High — When your home is valued higher, your reverse mortgage loan amount is higher. If your home value falls, then the amount you qualify for also falls — and, in some cases, you might not qualify at all.

When Interest Rates Are Low — When interest rates are low, you can get access to more money from a reverse mortgage. (Conversely if rates start rising then you may qualify for less if you can still qualify at all.) Interest rates are at record lows right now.

When You Want the Loan to Improve Your Quality of Life — For most homeowners, your home is your most valuable asset. You have worked hard to pay down or pay off your mortgage. There is no reason you cannot benefit from your own diligence. Many reverse mortgage borrowers get these loans so that they can live a better life in retirement. There are no restrictions on how you use the money, however, it is never recommended to borrow money to fund investments. 

When You Are Getting the Loan as a Back Up Plan — More homeowners are securing a reverse mortgage as a backup plan, especially if you own your home free and clear. A reverse mortgage line of credit can be an excellent way to increase flexibility for your finances and provide more options for maximizing wealth. If you don’t necessarily need access to money but want a rainy-day fund or an extra financial option, then a reverse mortgage is a solution.

A reverse mortgage with a line of credit can be one of the MOST affordable ways to secure a reverse mortgage:

  • When you get a reverse mortgage with a line of credit, you won’t accrue interest on the money being held in the account, but it is there for you if you need it. You will only accrue interest on money you withdraw from the line of credit.
  • Reverse mortgage lines of credit grow every year after you establish them. This gives you more borrowing power as you age.
Reverse Mortgage Guide

Leave a Reply