Reverse Mortgages and Retirement Income Strategies
Everyone looks forward to retirement and entering "the golden years". One of the significant challenges during retirement is making sure there is sufficient income to maintain a comfortable lifestyle. Once in already in retirement and no longer working, many retirees face the prospect of living on a fixed income from pensions, savings, and social security. While those provide stable income, they may not always be enough to cover rising expenses such as healthcare costs, or unexpected financial emergencies. Inflation has really taken hold in recent years making everything more expensive. With the cost of living rising sharply this can hurt the purchasing power of retirement funds, making it essential for retirees to plan and invest wisely to secure their financial well-being during their retirement years. It has also been a driving force in people exploring what a reverse mortgage can do for them.
How Can a Reverse Mortgage Supplement Retirement Income in California?
A reverse mortgage can be a valuable tool for older California homeowners to supplement their retirement income. Many already in retirement are facing financial challenges and need extra funds. One solution gaining popularity is to tap into their home equity without selling their property. That is how a reverse mortgage can provide a much-needed source of money to help make current retirement income go further.
Retirees in California have multiple ways to choose how they want to receive the money from a reverse mortgage. Choices include a lump sum to cover immediate expenses or a line of credit for financial security and the ability to make draws in the future as desired. Unlike traditional mortgages that require the borrower to make monthly payments, reverse mortgages have no monthly monthly mortgage payments. (borrower must still live in home and pay the ongoing taxes and homeowners insurance bills) The extra funds from the reverse mortgage can boost cash flow. This can help ease financial stress and allow retirees to truly enjoy their retirement years.
During the life of the loan, California homeowners retain ownership of their homes and continue living in the home they love, providing a sense of stability and familiarity during retirement. Repayment of the reverse mortgage loan is deferred until their is a maturity event. Examples of a maturity event are death of the last borrower, last borrower moving out of the home permanently (such as going to a nursing home or assisted care facility) or if borrower defaults on the tax and insurance bills on the home which they must continue to pay. As long as the borrower does that, retirees can rest assured that their homes remain secure without immediate repayment obligations. The borrower can enjoy all the benefits of the reverse mortgage with a boost in cashflow.
Are Proceeds From A Reverse Mortgage Taxable Income?
No, reverse mortgage proceeds aren't taxable income.*
"Reverse mortgage payments are considered loan proceeds and not income. The lender pays you, the borrower, loan proceeds (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home." -irs.gov *
This information is covered specifically on the IRS website: LINK TO IRS PAGE WHICH COVERS THIS TOPIC.
* IRS Page Last Reviewed or Updated: 15-Jun-2023
Not Financial Advice: Borrower is advised to consult their own tax professional or financial advisor.
Ready To Enhance Your Retirement Lifestyle With a Reverse Mortgage?
Open up new possibilities by supplementing retirement income with a reverse mortgage. Take a look for yourself: Are you ready to explore if additional funds from a reverse mortgage could allow you to enjoy a more comfortable lifestyle? Allow you to pursue new hobbies and interests? Take the vacation long-held travel dreams?
Let's Have a Conversation About What a Reverse Mortgage Could Do For You
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