Available to certain homeowners age 62 and older, a Federal Housing Administration reverse mortgage can be used to meet the needs of seniors in a variety of financial situations. Some people may be reluctant to apply for this type of equity conversion program, thinking that it sounds like borrowing against a home or some other financial decision that could lead to debt. Instead, the funds raised with a Home Equity Conversion Mortgage (HECM) only use the home equity. Rather than being a last resort for dire circumstances, a reverse mortgage may be appropriate to satisfy many common financial concerns.

Supplemental income

Pensions and retirement funds provide resources for those who have prepared for retirement throughout their careers. Due to life circumstances, not everyone can live off these resources and the fruits of other investments. A reverse mortgage is a common way to supplement other sources of income. Seniors do not need to take a job as a receptionist or cashier when they have an accumulation of wealth in the form of home equity. It is important to be able to live comfortably after decades of enduring the rat race.

Health expenses

Even those who feel well prepared for retirement may be surprised by the rising costs of health care, especially when unforeseen medical problems arise. Diagnosis, treatment, and long hospital stays are just one side of the potential expense. Chronic conditions can mean years of expensive prescriptions and some level of ongoing medical treatment. Dialysis treatment, diabetes testing supplies, and other major medical expenses are more than one-time costs. Rather, a single diagnosis can completely alter a couple’s retirement prospects.

Pay the debt

While credit cards are convenient and sometimes necessary, interest rates can be especially problematic for those who no longer work full time. Whether they’ve spent money on grandchildren, family reunions, or practical expenses like utility bills, many seniors find themselves with debts that need to be resolved in a timely manner. Fixing financial affairs is one way to minimize the mess that will remain after death, but it also has the practical benefit of helping to ensure that creditors do not have sixteen family heirlooms and other valuables.

Financing renovations

Every homeowner knows that some maintenance projects are investments and save money in the long run. Similarly, renovations such as ramps may be necessary to improve accessibility as the home’s residents age. Ultimately, retirement means more time at home for many seniors, and there is no point putting off projects that have already been delayed for years. A HECM can be used to cover the costs of renovations without depleting other accounts or skimping on living expenses.

Homeowners should be aware of the many potential uses for a reverse mortgage. Rather than relying on a pension or the trickle-down of investment returns, a HECM enables homeowners to live more comfortably and solve financial problems by leveraging accumulated capital.