Members of the baby boomer generation are approaching retirement age and are woefully financially underprepared. The boomer lifestyle of high consumption and low savings puts them at risk for not having enough money to pay for their retirement, especially with increased longevity today.
FHA Reverse Mortgage can increase retirement income
One area where people approaching retirement can look to supplement their income is through a FHA reverse mortgage. This strategy works well if the property owners are not concerned about leaving their primary residence as an inheritance. Obtaining an FHA reverse mortgage also only is possible if the primary residence has sufficient home equity.
FHA Reverse Mortgage Hazards
The decision to get an FHA reverse mortgage should not be taken lightly. Though an FHA reverse mortgage can offer additional retirement income, the costs associated with reverse mortgages are significant and should be understood before obtaining a reverse mortgage. In addition, the decision to obtain a reverse mortgage should be discussed with family members if there are children involved who might be expecting an inheritance.
FHA Reverse Mortgage first step
The first step in figuring out whether an FHA reverse mortgage is right for you is attending a required counseling session with an approved FHA counselor. The counselor will discuss with you if your house is eligible for the program, what the financial repercussions are, and any alternatives to obtaining a FHA reverse mortgage. When you have completed the FHA counseling, you should be able to decide whether a FHA reverse mortgage is right for you and your family.
FHA Reverse Mortgage Payment Options
When obtaining a FHA reverse mortgage, there are three main different payment options to consider. The first option is to receive equal monthly payments for a specified term or for the life of the borrowers. The second option is to create a line of credit that operates similar to a home equity line of credit. The third option is to receive the entire reverse mortgage amount in one lump sum. There are advantages and disadvantages to each option and only the reverse mortgage holder can decide which is best for them. The most popular option currently is the line of credit as it offers the most flexibility.
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