Downsize to a New Home With a Reverse Mortgage
Last week we explored how you could use a reverse mortgage to produce an income for life while allowing you to live in your home until your death or you move out. We also considered the possibility of using a reverse mortgage to refinance an existing mortgage, thus eliminating a house payment and possibly creating additional monthly income.
This week we will look at a few more creative ways to use reverse mortgages, as suggested by financial planner Michael Kitces.
While most of us think of a reverse mortgage as a way to unlock equity in a current home without having to sell it, Kitces points out that another use for a reverse mortgage is buying a new home. While the buyer will need a larger than normal down payment due to the lower lump sum limits of a reverse mortgage, this technique can be used to increase cash flow while downsizing a home.