Many people believe that you should only get a reverse mortgage on your “forever” home. However, I am here to tell you that does not need to be the case. You can get a reverse mortgage (or a Home Equity Conversion Mortgage) on your current home and if you decide to sell your home and move in the future, you simply pay off the reverse mortgage upon sale and the remaining equity in your home is yours!

Many people do not know this, but a reverse mortgage is a loan that does not require you to make monthly payments of principal and interest and does not need to be paid off until you sell the house, permanently move out of the house, or pass away. Therefore, if you do not make any monthly payments of principal and interest (you are always required to pay the property taxes, homeowner’s insurance, and HOA dues if applicable), the interest is deferred and when you payoff the reverse mortgage, your balance will be higher than when you started. As with a traditional mortgage, you still own the home and the equity in your home is your equity. The value of doing the reverse mortgage sooner rather than later is that you can again skip making payments of principal and interest and therefore your income goes further, and you can save more money each month or simply spend your money in other ways.

So, what happens if you have a reverse mortgage, and you have a change in plans in 1 year or 5 or 10 years? Maybe you will decide to move into a smaller home or a home with less maintenance. Or you have a change in marital status or a change in your health and you are forced to move into a different home or into assisted living. No problem. Again, if your plans change, you will simply sell your home and pay off the reverse mortgage balance. You can use the equity from your home to purchase your next home or to pay for the living expenses in assisted living. 

I have had several clients this year decide to sell their current home, which they thought was their forever home, and had gotten a reverse mortgage. These clients simply sold their home and paid off the reverse mortgage, then purchased a new home with the proceeds of their home sale and several of them even got a new reverse mortgage on the new home. Yes, you read that right. You can absolutely get more than one reverse mortgage; you are simply limited to one reverse mortgage at a time because the reverse mortgage must be on your primary residence.

So, remember that life is a journey and we do not always know what tomorrow will bring. However, what we do know is that we must live for today, and plan for tomorrow. That is why a reverse mortgage is such a powerful tool because it allows you the ultimate flexibility of not being forced to make mortgage payments of principal and interest. It is also important to know that you can always make payments without any penalties, in any amount, at any time. Therefore, this again gives you control of one of your largest expenses in retirement; your housing expense.