Most people think of reverse mortgages as the last-gasp attempt to stay in your house when you’ve run out of money in retirement. But even before they get into financial trouble, some seniors are using these loans as a financial planning tool, so they can leverage the equity in their homes on their own terms. That’s according to a recent op-ed written by MarketWatch Investing Columnist Beth Pinsker.
In addition to discussing how reverse mortgages work, Pinsker interviewed 76-year-old retiree Paul Dandrea, who faced this decision a few years ago and decided to go with a reverse mortgage.
His goal was to buy in Arizona before selling his home in North Carolina. So he leveraged a house he knew he was going to end up selling, and shifted the assets into what he expects will be his long-term retirement home.
“It’s a smart planning tool if you happen to get your hands on some equity, knowing you don’t have to pay it back until you’re ready to sell your home,” he says.