Accumulated equity from residences has become a popular method to raise cash. Reverse mortgages are developed for senior citizens aged 62 and older, and encourage them to convert their home equity into cash. Unfortunately, reverse mortgages restrict your ability to pass on your property to your heirs. At the same time, they impose significant fees, interest rates, and closing costs. If you are considering if a reverse mortgage is right choice you, be aware you still have several options before you settle. To learn about the best alternative to reverse mortgage with no closing costs, continue reading this post.
To avoid reverse mortgage closing costs, consider downsizing from your current residence. Unfortunately, downsizing requires you to leave your current home. However, if your home is too large or too difficult to maintain, this may be especially appealing. Consider selling your home and using proceeds to purchase a more affordable, likely smaller home. However, you most likely have to sell your home privately in order to avoid Realtor closing costs. If you are able to, downsizing your home is likely the most inexpensive alternative to a reverse mortgage. In some cases, you can even make money from downsizing your current property.
Consider refinancing the property you currently live in. You likely have multiple refinance options for your mortgage. Refinancing keeps you in your current home. In addition, refinancing still allows you to pass your home on to your heirs. To lower payments, refinancing typically offers lower mortgage rates to reduce your total monthly payments. These lower payments can quickly help you save extra cash. At the same time, lower payments help you to build equity on your home even faster. Consider refinancing your current home if you are seeking a cheaper reverse mortgage alternative.
Apply For A HELOC
Consider applying for a Home Equity Line of Credit (HELOC). These are offered in term periods, generally of five to fifteen years. The initial part of your term is often referred to as a ‘draw’ period. During this period, you are only responsible for paying interest on the loan. This helps you save the necessary funds required to pay back the principal throughout the remaining portion of the loan. The fees associated with an HELOC are significantly cheaper than those of a reverse mortgage. Based on other requirements, HELOC interest payments are often deductible from your annual taxes. Most importantly, lines of credit allow you to stay in your current residence, and eventually pass it on to your heirs. Apply for an HELOC if you need a cheaper alternative to a reverse mortgage.
Rent Portions Of Your Home
Consider renting portions of your home as a reverse mortgage alternative. Thousands of senior citizens rent portions of their house temporarily on well-known home sharing websites. These allow you to charge a fee for travelers to rent rooms in your house. This additional monthly income may help you make the necessary payments on your home and avoid applying for reverse mortgage. If these funds are not sufficient, consider searching for a monthly renter. Renters are constantly seeking lower rates than what is currently being offered. A constant monthly income may be sufficient to adequately make all of your home payments. Consider renting portions of your home to avoid applying for a reverse mortgage.
Retirement Plan Funds
If you are still employed, you may be able to draw the required funds from your retirement plan. You can withdraw funds from your 401(k) penalty free if you are at least 60 years old. As long as you have saved enough throughout the years, these funds may be enough to save you from applying for a reverse mortgage. If you are already retired and receiving distributions of your retirement plan, you can likely increase the distributions. Obviously, you can only increase these amounts for a short period of time before you run out of funds. However, this may provide you the necessary boost to reclaim stability and avoid applying for a reverse mortgage.
Reverse mortgages have become a popular financing option for senior citizens. However, there are several reverse mortgages pitfalls for homeowners. They often include high interest rates, low home valuations, and expensive closing costs. You have several options available in search of a reverse mortgage alternative without closing costs. You can sell and downsize your current home. Consider refinancing your current residence. Apply for a home equity line of credit. Moreover, consider renting portions of your home temporarily or monthly. Furthermore, consider withdrawing funds from your retirement plan. If you are wondering about the best alternative to reverse mortgage with no closing costs, consider the ideas mentioned in this post.