Financial planning for the future with a Reverse Mortgage

Think about your retirement plan now

You have just recently moved into your lovely new home with your other half and are currently in the stages of buying some nice pieces of furniture and deciding what colors to paint each room, as you ultimately create that warm homely feeling.

So, the last thing on your mind is what you plan to do with the property in about 30 years’ time. However, it is never too early to have a long-term financial investment plan. You can start by using a Reverse Mortgage Calculator.

This will give you an idea of what you could potentially receive back in equity with regards to the value of your property. By inputting your age, location of the property, marital status, and current market value it will enable you to see what you could receive with regards to cash.   

 Why do we have to wait so long to have a reverse mortgage?

Well, when you both reach the age of 62 you will then be eligible to apply for a reverse mortgage. This is because 62 is deemed the minimum age to get one according to the HECM (Home Equity Conversion Mortgage Program). The only exception when it goes down to 60 years old is if you apply through a private reverse mortgage program.

The amount that you could potentially release from your property will be determined by the lender. You will receive access to cash tied up in your property to pay for the maintenance of the property and all the taxes. Once that is all sorted, the remainder of the cash available to spend is completely up to you.

Yearly starting rates of 3.5% will most likely be offered. Some eligibility criteria to bear in mind are the following, the property must include either a single-family home, properties built after June 1976, condos or townhomes, and multi-unit properties with up to four units.

Small steps you could take to start saving now

There are tasks you can do now to ensure your retirement fund is gradually building up nicely, such as planning various investments in your thirties to fully prepare yourself for a comfortable retirement. You will be surprised how a small pot of money saved aside when you are working away in your 20’s and 30’s can soon increase into a nice sum years later.  

Organizing a weekly/monthly financial budget to keep on top of your ingoings and outgoings is a useful starting point. Having a pension set up is certainly a way of investing for your future. You will most likely already have one through your employer, but you could also set up a private one too. Simple tasks like putting aside a small amount of cash aside each month into your savings account will certainly help, particularly if you are a couple and both contribute. You will be well on your way to getting that early retirement before you know it!