#75 Using a reverse mortgage to finance a winter home
REVERSE MORTGAGE CAN HELP FEATHER A NEST IN THE SUN
You’ve been toying with the idea for years, but all that ice and snow last month in Indiana “clinched the deal” for you. Widowed and in your mid-seventies, you want to remain a resident of Indiana, but own a small place in the sun where you can spend the winter months. You have cousins in New Mexico, and will probably look there first.
You have the resources to make a substantial down payment on a second house or condo, but in order to totally fund a purchase, you’d need to use retirement plan assets, which you are reluctant to do.
You might consider a HECM refinance, which is a type of reverse mortgage loan where you use the equity in this home to purchase a second residence. Your Indiana house would remain your primary place to live, but you’d be tapping the equity you’ve built here to fund that “place in the sun.” Depending on the numbers, you might even be able to totally finance the purchase of the New Mexico home.
Of course, you’ll want to be sure your income is enough to cover property taxes, insurance, and other costs of home ownership in both places. Assuming that’s the case, a reverse mortgage can be an excellent way to “feather a nest” in the sun.