If you need cash in the bank for your retirement, you may be wondering whether downsizing or a reverse mortgage might be the right choice for you. Downsizing will let you sell your existing house and purchase a new house (or condo) in its stead, while a reverse mortgage is like a loan that you take out against your house. Here's how you can decide on which is the best option.
A Reverse Mortgage Gives You Money Now
A reverse mortgage is designed to give you cash now and leave you with your home. Downsizing requires that you sell your existing house and find a new place to purchase or rent, which can be a lengthy and complex process. Moreover, it can also be a costly one. Though there are some fees related to a reverse mortgage, you'll get an amount that is based on your home's appraised value. When you sell your home, you'll have to pay for real estate agents and you might need to make repairs and renovations on your home first.
You Can Live in the Home That You're Comfortable In
If you're currently comfortable in the home that you're in, a reverse mortgages allows you to stay there while also getting a lump sum of money or a steady income. The mortgage lender is going to pay you while you live in and take care of the home, and only after you pass will the home revert to them. While you live in your home, you still have complete control over your property, just as you did before.
A Reverse Mortgage Doesn't Leave Behind Equity
The main downside to a reverse mortgage is that you won't be able to leave your home as an asset to your children. However, if you're thinking of downsizing regardless, this isn't a downside at all; you're already intending on selling your home. You won't have the equity that you might in a smaller condominium, but again, if you're thinking of renting, that equity loss isn't going to be realized.
The downside to a reverse mortgage might be if you intended to leave your family a condominium later... but ultimately your personal expenses and debts now matter more.
A reverse mortgage isn't for everyone, but it is a very flexible and versatile method of getting the cash you need now. For more information, you can contact a local reverse mortgage lender, like Senior Mortgage Solutions. Reverse mortgages are highly regulated as financial tools.
When was the last time you realized you were in the red financially? Although most people don't think about their finances on a day to day basis, it can be easy to find yourself living paycheck to paycheck if you aren't careful. I began thinking carefully about the financial implications of some life decisions I was making, and I knew I had to make a difference. I talked with a loan officer about getting things together, and he was instrumental in helping me to work things out. Read more about my financial successes and failures on this little website. You might be able to avoid some of my previous mistakes.