Are you considering a reverse mortgage? If you are you, may hear conflicting information about the wisdom of making such a move. You might want to consult with a Fee-Only financial planner who is well versed in retirement planning to get an expert opinion on how a reverse mortgage might work for your unique finical situation.
As you weigh information about reverse mortgages, consider the source, as you would when thinking about any other suggestions or advice. Rather than enter into the debate about whether choosing a reverse mortgage is a smart move, we would suggest that you think about your reasons for taking this step. A reverse mortgage should be part of an overall strategy for spending assets in retirement, and not a move made out of desperation because you haven’t saved enough for retirement. A reverse mortgage can be a useful tool, especially if you live in an area with high housing costs and you have built up a lot of equity.
In an article that asks, “How risky is an FHA reverse mortgage?” USA Today sought the advice of a NAPFA (National Association of Personal Financial Advisors)-registered advisor and suggested that readers consider a reverse mortgage if they can answer the following questions with “yes” -
1. I need cash — monthly, lump sum or randomly.
2. I intend to live in this home indefinitely.
3. I am not concerned about retaining any equity in the home, whenever I depart it.
4. I fully understand and am comfortable with the costs of a reverse mortgage.
Even the questions above need to be considered in light of your individual financial goals. The article goes on the note that even well-intentioned people who work for organizations that provide mortgages may encourage you because they benefit when you decide to take on a reverse mortgage. Since a Fee-Only financial planners will not be compensated if you take on a reverse mortgage, it would be good to seek the advice of an impartial advisor before you decide take out a loan on your home.