Reverse Mortgages will make a comfortable retirement a reality!

What’s a senior citizen to do? If the stock market dips or if living costs are more than expected, retirement years can be far from the golden years. Celia Mason, a Certified Senior Advisor, works with retirees to develop strategies to deal with this challenge.

For seniors who own their homes and want to age in place, a reverse mortgage might be just the ticket for finding some retirement financial relief. "The reverse mortgages give seniors, age 62 and older, cash, a line of credit or monthly income, or even a combination of all three, that does not have to be paid back for as long as they continue to live in their homes. In other words, no monthly payments."

The loan is paid back when both spouses pass away or permanently move out. And the money is tax-free. "It’s a great way for seniors to live more comfortably, have more financial security and even go out and have some fun," explains Mason.

"Reverse mortgages had some negative connotations for a while years ago," says Mason, "but today under regulations from HUD (Department of Housing & Urban Development) seniors can never lose their homes or be forced to move out." They can still participate in the appreciation and their heirs will never owe more than the resale value of the home. The process is very well established, and even involves third-party counseling for seniors to ensure they really understand what the consequences are of taking out this mortgage.

The number one concern borrowers have is that the closing costs can be substantial, primarily due to FHA mortgage insurance requirements to guarantee the loan. However, these costs are rolled into the total reverse mortgage loan and the borrower does not need to write a check. "To make the loan worth these initial costs, homeowners should plan on living in their homes for at least three to five years," says Mason.

While many of Mason’s clients take out reverse mortgages for day-to-day living expenses or to cover healthcare costs, some take out these loans just because they want to use the cash for something important or meaningful to them.

Mason has clients who want to pay for their grandchild’s college expenses or take that long-dreamed-of trip around the world. "Some clients expressly want to make a charitable gift with the funds before they die or just want to be able to spend the money as they choose while they are alive, rather than leaving it for someone else to spend," she explains.

Mason also cites others who have used the funds for sophisticated purposes such as purchasing an income-producing rental property or buying a life insurance policy for estate-planning purposes.

"Reverse mortgages are really a great option for seniors, especially in communities like those here in the Bay Area, where home values have skyrocketed."

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