Alternatives to a Reverse Mortgage

We here at Dependable Homebuyers are sure you have heard many times that you may be able to transform the equity in your home into cash with a reverse mortgage. This loan lets you borrow against the equity in your home to get a fixed monthly payment or line of credit (or some combination of the two). These advertisements appear on social media, radio, and television ad nauseam. Payment is deferred until you move out, sell the home, become overdue on property taxes and/or insurance, the home falls into disrepair or you die. Then the house is sold as is and any excess after repayment goes to you or your heirs.

Selling a House for Cash is a Top Option for Those Considering a Reverse Mortgage

Reverse mortgages can be questionable if not done correctly and require meticulous attention to the rights of the surviving spouse if you are married. Of course, the end of the process means you or your heirs give up your home unless you are able to buy it back from the bank. Unethical lenders can also be a huge risk, so home sellers must be sure to choose this option carefully.

Our Original Take

We at Dependable Homebuyers (We Buy Houses) would like to offer that there are other ways to tap into your home’s equity that are worth considering and, in many cases, can be more effective and profitable. The following is a quick look at some alternatives to reverse mortgages.

Those who are in urgent need of some cash for things like medical expenses, but would still want to live in their houses, can sell their house fast to Dependable Homebuyers, who will then rent the home back to them. Unlike a reverse mortgage, the person who sold the home will no longer be responsible for any repairs that are needed for the home. This option is perfect for elderly people who have owned their homes for long periods of time and want to remain there throughout their twilight years but need money for bills that are associated with aging.  The only thing they will need to think of is paying the rent. Dependable Homebuyers will be responsible for any repairs that have been performed. This is excellent for retirees who do not have the strength, stamina, or expendable cash to perform such tasks as yard work and home repair.  It is a very similar experience as renting an apartment except the apartment is actually the house you have come to know and cherish.

Dependable Homebuyers is composed of a team of real estate professionals who are familiar with the neighborhoods that they are assigned to and are therefore well versed in determining a suitable price for the home in the current market. As such, after inspecting the home, they can provide the homeowner with a guaranteed cash offer within 24 to 48 hours. Those who are interested in selling their home to Dependable Homebuyers will just need to know that there are four basic steps.:

1. The first step is to notify our company about the features of the property.
2. The second step is for our company to evaluate the information given and if it complies with our buying criteria, we will contact the homeowner to set up an appointment where we will inspect the property.
3. The third step is for our company to submit to the homeowner a written, no-obligation offer. As always, we will assure that the offered price is fair and the best possible value. Of course, the homeowners can always make a comparison of the offered price with the selling prices of similar homes and they are not obligated to accept the offer.
4. The last step is, if the homeowner excepts the offer, to meet a local reputable title company. The result is the homeowner gets the cash in as short a time, even as quickly as seven days!

The reason the process is so quick is that we are not a typical real estate firm and the home is never listed. We will truly be the ones who will purchase the home and, as always, we are willing to pay in cash. This means that we can close a sale quickly because there is no need to wait for any approvals unlike in the usual home buying process.

Furthermore, there are no real estate agent fees because we are the direct buyers of the home. What this means is that the amount that is quoted by us at Dependable Homebuyers is actually the whole amount that the homeowner will receive in cash. There are no hidden fees or taxes that are not in the original quote. Additionally, barring the desire for a higher quote, there no need to make any repairs or clean the property because we will buy the house in any condition.

We at Dependable Homebuyers (We Buy Houses) pride ourselves on buying homes quickly, allowing the homeowner to get hold of the money that they need in just a short amount of time.  Our cash offers for the home are always fair, and our customers are always given the best possible price for their home.

If, for some reason, this does not seem like the right fit for you, there are several other alternative methods you can consider before undertaking a reverse mortgage.

Refinancing Your Existing Mortgage

If you have an existing home loan, you may be able to refinance your mortgage to lower your monthly payments and free up some money. One of the best reasons to refinance is to lower the interest rate on your mortgage, which can save you money over the life of the loan, lower the size of your monthly repayments and help you build a stake in your home quicker. Also, if you refinance instead of getting a reverse mortgage, your home continues to be an asset for you and your beneficiaries.

Take Out a Home-Equity Loan

Basically a second mortgage, a home-equity loan lets you receive money by leveraging the equity you have in your home. It works the same way your primary mortgage does. You receive the loan as an upfront lump-sum payment, and you cannot draw any additional funds from the house.

For tax years up to 2018, interest on a home-equity loan for amounts up to $100,000 are frequently deductible regardless of how you used the loan, be it for credit card debt or for student loans, etc. Additionally, if you use the loan for what are called qualified purposes which are to, “buy, build or substantially improve the residence that secures the loan,” you could take tax deductions on up to $1 million including any first-mortgage debt you have.

Nevertheless, the new Tax Cuts and Jobs Act narrowed the eligibility for a home-equity loan deduction. For tax years 2018 through 2025, you will not be able to deduct home-equity loan interest unless the loan is used specifically for the qualified purposes described above. It also dropped the level at which interest is deductible to loans of $750,000 or less.

These loans are generally fixed-rate loans, which provide protection against rising interest rates. Due to that, the interest rate is typically higher than for a home equity line of credit. As with refinancing, your home remains an asset for you and your grantees. Unfortunately, because your home acts as insurance, it’s important to understand that it is at risk of foreclosure if you default on the loan.

Take Out a Home Equity Line of Credit

A home-equity line of credit, or HELOC, gives you the opportunity to borrow up to your allowed credit limit on an as-needed basis. Unlike a home-equity loan, where you pay interest on the whole loan amount whether you’re using the money or not, with a HELOC you pay interest solely on the amount of money you actually withdraw. HELOCs are flexible loans meaning that your monthly payment will vary with shifting interest rates.

The rules about deductibility and restricted purposes are the same as for a home-equity loan.  A HELOC maintains your home as an asset for you and your heirs.  Nevertheless, as with a home-equity loan, your home acts as collateral and could be foreclosed if you default.

Sell Your Home and Possibly Downsize

The above choices keep you in your existing home. If you’re willing and able to move, though, selling your home gives you access to the equity you have built. This option may be particularly appealing if your home is larger than you currently need, too challenging or costly to maintain, or has prohibitively exorbitant property taxes. The profits can be used to buy a smaller, more affordable home or to rent, and you’ll have extra money to save, invest or spend as needed.

Get the Kids Involved

Another alternative to a reverse mortgage is to sell your home to your children. One approach is a sale-leaseback agreement, in which you sell the house, then rent it back using the cash from the sale. As landlords, your children get rental income and will be able to take discounts for depreciation, real estate taxes, and maintenance.

Another method is set up a private reverse mortgage, which works like a reverse mortgage except the interest and fees stay in the family. Your children make regular payments to you, and when it’s time to sell the house, they recover their contributions and interest. Although it’s not free to set up this type of arrangement, it is typically much cheaper than getting a reverse mortgage through a bank, and the home remains an asset for you and your children. Selling to your children has tax and estate-planning consequences, so it’s important to work with a competent tax specialist or attorney.

So, What Next?

Reverse mortgages may be a good option for people who are house rich and cash poor, with lots of home equity but not enough income for retirement. There are other options, however, that allow you to tap into the equity you have built up in your home.

Before making any decisions, it’s a good idea to research your options, shop around for the best rates and consult with a qualified tax specialist or attorney.  You should also contact us at Dependable Homebuyers to be connected with an expert who can give you all the information you need before taking the sometimes unnecessary plunge into a reverse mortgage.

THE BOTTOM LINE: Dependable Homebuyers can be the solution to your real estate problem. If you contact us today, you can have a no-obligation cash offer in le 24  – 48 hours. You will pay no fees, and you will have cash in your hand in as little as seven days. 

What are you waiting for?

You could already be on your way to getting CASH in your hands. Contact us NOW!