I am often asked why seniors get a reverse loan, there are various reasons and different situations where it becomes the best option, and over the years I have encountered the most common reasons and they tend to be the same ones each time I meet with a client.
The number 1 reason is that seniors simply don’t have enough money every month to cover their ongoing expenses and especially since services, utilities, food, insurance, and medical care have increased but not their income and they may be burdened with a mortgage payment and using their savings to pay it each month.
The number 2 reason is for unexpected and major expenses. Lately, I am meeting with families who can’t afford to pay caregiving expenses, due to a major medical event and they are draining the money from their savings and investments to cover the fees and are concerned about running out of money.
Another unplanned expense might be home repairs. Typically it is a very expensive plumbing repair or a new roof for their home. Quite often there is a great deal of deferred maintenance and now repairs have become necessary and can no longer be put off or delayed.
The number 3 reason, is they want to remodel their home and make it more “senior friendly” as they age and plan to continue to live in their home. It could be remodeling a bathroom or kitchen to make them easier to maneuver in and make things easier to reach if someone is in a wheelchair and of course other considerations.
And the number 4 reason, is they simply want more money to enjoy their life. They may want to travel, purchase a second home using the reverse loan money towards that purchase, or simply to have the peace of mind, that they will not be financially restricted because they will have enough money to meet their personal needs.
A reverse loan can be used for many different reasons, but these are the ones which are the most commonly used by seniors and their families to solve a worry or problem.