Many people think that the math surrounding a reverse mortgage is complex. Indeed, it can be in the sense that you need to factor in a number of numbers in order to determine how much of a loan you need and how to budget that loan. However, there's a really simple equation to consider when you're first starting to think about the pros and cons of the reverse mortgage loan.
You see, we discuss a lot of different reasons that one might need a reverse mortgage loan. However, the reasons all boil down to one core reason that people require a reverse mortgage loan: they need money. The equation that you need to consider is whether your income is more than or less than your expenses.
After retirement, many people find that there is more money going out each month than coming in. Income drops and expenses rise. If they do so in a great enough proportion, you may find that your expenses exceed your income. Basic math will tell you that this means that you're going to run out of money. If you do this simple equation and come out with a negative number then you need to look at a reverse mortgage loan.
You will certainly need to make a lot of different financial decisions related to the reverse mortgage and budgeting to use it well. A financial planner can help you with that. But you really don't need professional help to determine if your expenses exceed your income.
Question of the Day: Do you think that this simple reverse mortgage equation is enough to determine whether or not you need a reverse mortgage?
