If you haven’t looked into a reverse mortgage loan it’s pretty easy to assume they’re a loan type that has too many risks and no real benefits. Before the past few years, reverse mortgage loans weren’t as regulated and left a lot of retired people at risk of losing their homes. It’s understandable that they got a bad wrap, but with updated regulations, things have changed.

A reverse mortgage loan has a lot to offer when it comes to your financial situation. There are benefits that you may not have considered. Retirement isn’t what it once was and many people are left struggling to afford their monthly bills and even just basic living requirements. If you’re looking at how you’re going to get by and feeling overwhelmed, you’re definitely not alone.

The good news is you do have some options if you’re really struggling and a reverse mortgage loan is an option you definitely should look at. They work differently than standard loan types which can give you more freedom and help your financial situation become more stable. Here are some financial benefits of a reverse mortgage loan.

What Is A Reverse Mortgage Loan?

A reverse mortgage loan is a loan you can take out if you’re age 62 or older and have equity built up in your home. It allows you to convert that equity into cash that you can use for day to day expenses. It’s called a reverse mortgage loan because it works in the “reverse” of a traditional loan.

Instead of a borrower making payments to the lender, the lender is making payments to you, as the borrower. The loan is due for payment when you sell your home or are no longer permanently living in your residence. This could include moving to a nursing home, extended travel, or passing away.

You can use tools like a reverse mortgage loan calculator to figure out the future balance of your loan. Knowing what your future balance might be can help you plan out repayment options and make a more informed decision about the loan itself. It’s a good idea to use a reverse mortgage calculator before you sign on the dotted line.

What Are The Financial Benefits Of A Reverse Mortgage Loan?

Because there are no limits placed on how you can spend the funds gained from your loan there are a lot of benefits to be looked over. The way you use your loan is entirely up to you. You can choose to be paid in a lump sum all at once, or get monthly disbursement payments. No matter which option you choose you’ll still have a chance to benefit financially from the loan itself.

A few of the ways you can see some financial benefits are:

●     Access To Cash:

Reverse mortgage loans give you access to a cash flow you might not have right now. A lot of retirees are depending on a very fixed monthly income and things can get tight. With a reverse mortgage loan you can have an influx of cash to help you pay bills, buy day to day living items like food or toiletries, or catch up on financial obligations you may have fallen behind on.

If you’re struggling to figure out how you’re going to continue living your life because your retirement costs are more than you realized, a reverse mortgage loan can help. The access to cash you’ll have can give you wiggle room and a chance to breathe. It’s a good option if you’re currently not sure how you’re going to get by anymore.

●     You Can Pay Off A Traditional Mortgage:

A lot of people think that you have to have your home paid off to qualify for a reverse mortgage loan. This is entirely untrue. In fact, you can use a reverse mortgage loan to pay off a traditional mortgage and eliminate a monthly payment that may be causing you a lot of stress.

Since you can use it to pay off your traditional mortgage and eliminate at least one monthly bill, you’re still gaining the wiggle room benefits you read about earlier. Using the loan to pay off your mortgage is just a different way you can gain that room to breathe and a benefit your financial situation.

●     You Can Protect Your Retirement Savings:

If you’re finding yourself getting by right now but only because you’re dipping into your savings more quickly and more often than you’d like, a reverse mortgage loan can help with that too. You can use the loan to help extend how long your savings last, especially if you use the funds to pay for things you’re currently pulling from your nest egg.

If you’re using your savings to cover things like bills or medical expenses you can switch to using the funds from your reverse mortgage loan instead. It’s a little different than freeing up cash for day to day living, but it’s still a financial benefit to consider. Making that nest egg you’ve built up last as long as possible is going to make your retired life easier and more stressfree. That’s definitely something to consider.

●     You Can Check Some Bucket List Items Off:

Remember, there’s no specific way you are required to use the funds from your loan. That means if you are doing well, and getting by but you’ve found you aren’t able to do some of the fun things you wanted to do during retirement, you can use your loan for those things too.

You can use the loan to pay for travel expenses, fun new “toys” like a boat, or really anything else you have on that list of things you just really want to do. You don’t have to be struggling financially to benefit from a reverse mortgage loan. There are definitely still benefits to be found even if you’re doing really well in your day to day life.

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How Do I Pay Back A Reverse Mortgage Loan?

This is a common question asked by many reverse mortgage borrowers. There are a few ways you can repay your loan, but remember that the loan won’t be due until the home is no longer your permanent residence. That means you have some time to figure out the best repayment option for you. It’s not as immediately pressing as a monthly loan payment.

You can pay your loan back by selling your home and using the proceeds from the sale. This is a very common thing to do with reverse mortgage loans. If you leave the house to an heir after you pass away they can also choose to pay the loan back in this manner. Either way, the sale of the home is how the loan is repaid.

The loan can also be repaid by an heir choosing to keep the home and refinancing the reverse mortgage loan converting it into a traditional mortgage loan. If the heir qualifies for a reverse mortgage loan themselves, they can also choose to take out a new loan in their own name. Another option is to repay the loan with savings out of your own pocket.


As you can see there are some clear benefits to getting a reverse mortgage loan. You don’t have to struggle day to day just because this type of loan has had a poor reputation in the past. With updated regulations and a good understanding of what’s required you really do stand to gain quite a bit from a reverse mortgage loan.

Make sure you ask any questions you might have and are clear on what you’re doing. There are counseling sessions and time spent with your lender that will give you the chance to be as clear as possible about the loan process. As long as you’re making an informed decision you’ll enjoy a much improved financial situation in the end.

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