Nationally syndicated retirement columnist Terry Savage published a checklist of key considerations for consumers while shopping for a reverse mortgage.
The big picture: Your house will become your piggy bank pension for tax-free withdrawals in your retirement, says Savage. But there are some other things to think about before taking on a reverse mortgage:
- For example, how long do you plan to stay in your home? At a minimum, the answer should be five years, but it’s better if your time horizon is 10 years, says Savage.
- That’s because there are significant fees to set up a reverse mortgage, which are built into your line of credit. It’s just not worth it if you won’t be able to keep up with rising property taxes or might need assisted living in the near horizon.
One fun thing: Savage helped her father obtain a reverse mortgage many years ago that helped provide the financial security he needed to live out his remaining years.
The bottom line: Don’t be deterred by the complexity of the process, or the painful discussions about mortality that underlie this decision, says Savage. A reverse mortgage can be a helpful solution if done correctly.