Retirees can feel the impact of recent federal interest rate hikes and persistent inflation as they live on a fixed income. In June 2022, the Bureau of Labor Statistics showed that America had endured an extraordinary 9.1% inflation – its highest in 40 years! While it has since slightly come down, price increases have stayed rather high. In the present economic climate, many retirees find it difficult to make ends meet without having to access funds from their investments. Fortunately for those with significant equity in their homes, considering a reverse mortgage may provide some relief during these trying times.

Here’s how eligible homeowners can use a reverse mortgage to combat inflation and enjoy its financial benefits.

Combat Tight Budgets By Boosting Cash Flow

As living costs continue to rise, those on fixed incomes are often forced to find creative ways to supplement their incomes. One of these solutions may be as simple as getting rid of a large expense in your budget, such as mortgage payments. Doing so can provide retirees with some much-needed financial relief and allow them the breathing room necessary for other expenses without having to return back into the workforce.

With a reverse mortgage, you can free up extra income each month without needing to add another source of revenue or withdraw money from your investments. This is an especially great benefit for those on fixed incomes as it eliminates the necessity to make monthly payments towards their mortgages.

Eliminate and Avoid Paying High-Interest Debts

A reverse mortgage can be a great way to boost cash flow, as well as help you settle high-interest debt such as credit cards. Unlike other forms of debt, the interest that builds up over time on a reverse mortgage is added to the loan balance and does not need to be paid off until the due date arrives.

Even people without a hefty amount of high-interest debt can still find themselves struggling to make ends meet in this current climate of high inflation. Rather than immediately jump into monthly payments with credit cards and other options, a reverse mortgage is a perfect solution that provides an infusion of necessary cash while not burdening already tight budgets.

Unlock Additional Funds Without Added Tax Burdens

The Internal Revenue Service (IRS) regards reverse mortgage proceeds as a loan and thus, unlike income, it will not be taxed. This means borrowers can access their equity with no worries of incurring additional tax liabilities on their incomes; they are free to use the money for whatever purpose they choose!

Strengthen Your Financial Freedom

In an environment where many feel the need to reduce their expenses, a reverse mortgage can be the key to unlocking new opportunities. Here are just a few ways to use a reverse mortgage to fight inflation:

• Help grandchildren avoid taking student loans. Instead of leaving a legacy in your will, consider using a reverse mortgage now to help grandchildren and young relatives get an education without the burden of debt.
• Fund Roth IRA conversion. Decrease future tax exposure by converting your IRAs into Roth IRAs.
• Take an extended international vacation. Inflation is even higher in other parts of the world.

When the economy is experiencing turbulence and insecurity, a reverse mortgage can be an extremely beneficial tool that provides you with more choices. Call 770-826-0222 to speak to a mortgage professional at Sword Mortgage or get started on your loan application process today.