Snowbirds & Reverse Mortgages

Snowbirds & Reverse MortgagesBeing a snowbird can be ideal for retirees. What, exactly, is a snowbird? Named after the habits of a certain feathered friend, a snowbird is a retiree who spends the winter months at a warmer location. This prevents them from experiencing the risks and chills of winter, benefiting their physical and mental health. Naturally, spending a few months a year at a different and warmer place incurs costs. You may have to purchase a small home or find a rental location that allows for short rent periods. Either way, this can cost tens of thousands of dollars. Luckily, this is a goal that is manageable and achievable with a senior reverse mortgage. Reverse mortgages are loans that do not need to be repaid for as long as you continue to live for more than six months in the hope that the loan is given for. The amount you get depends on the value of your home and is meant to be used to provide a steady stream of funds, a percentage of which must be used to pay off remaining housing debts.

If you do not have a lot of other debts or financial responsibilities, using the funds from a reverse mortgage on your permanent house can help to fund a winter getaway home. These funds can help you pay off the amounts on the new winter vacation home, and should also be used to pay for insurance, maintenance, and tax costs.

Regarding what kind of home to look for, it depends on your budget and how far you can travel. Going for homes in warmer spots is a must, but these homes can be simple retirement homes or can be located in other countries with smaller currencies. When you are not living in that home, you can even rent it out for a source of passive income.

Plenty of retirees take trips for three to six months annually to avoid the cold temperatures of their homes during winter and even autumn. Of course, it is a big financial decision, and it is best made when you have few other debts and financial responsibilities. Focusing on clearing bigger and more important debts first can give you the chance to become a worry-free snowbird in following years. If you need help making your decision, don’t be afraid to speak to a financial advisor about your options.