With reverse mortgages your debt grows larger and larger as you continue to receive cash advances, make no payments and the interest continues to grow on the loan balance. This concept goes against all principles of building wealth and smart asset management. You want to get compounding interest working for you, not against you.
I can read your mind. You get my point but you’re still looking for viable alternatives to live on your terms during your retirement years: Here are a few alternatives to reverse mortgages:
Sale-leaseback: You can sell the house to an investor or family member and then rent it back from the investor/family member under a lifetime lease. You have the advantage of taking the proceeds from the sale of your home investing it wisely and using it to supplement your income while you remain in comfortable, familiar surrounding.
Home-sharing arrangement: This is a fancy way of saying, “get a roommate to help you with the bills.” In return you’re able to remain independent and continue to reside in your home. As a side benefit, this arrangement can provide friendship and companionship. Save a dollar and have someone to talk too.
Sell the house and rent in a nearby neighborhood: It’s very possible that as a senior person, the house may be difficult to maintain both financially and physically. I know that it’s difficult to leave the happy memories behind. I also know that it’s difficult to remember the happy days of the past, when you’re stress in the present trying to financially support a house and trying to physically upkeep the house. Why not sell the house, rent something nearby that’s not as expensive and don’t require you to mow the lawn, shovel the snow, etc. With reduced expenses and the proceeds from the sale of your home supplementing your income, you’ll be better off financially, physically, and emotionally.
(Mortgage and Money Coach Damon Carr is owner of ACE Financial. Damon can be reached at 412-216-1016.)
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