Reverse Mortgage vs Life Settlement

Many financially distressed seniors are unsure about how to correct their financial problems after they retire. For most of them, at least on the surface, there’s simply a lack of options. We are here to tell you that you have more options than you think. Everyone has financial problems at some point, this is nothing to be ashamed of. All that matters is that there are options available to you.  

 

Savvy seniors have been looking into the potential benefits of a reverse mortgage, life settlement, or both. If the bills are piling up or you just want to free up enough cash to enjoy your golden years in style, you’ll want to learn more about life settlements and reverse mortgages. 

What is a reverse mortgage and how does it work?

First of all, what is a reverse mortgage and how does it work? A reverse mortgage is a type of loan in which you make money! That’s right, you can make money on a loan! When you take out a reverse mortgage, you are essentially borrowing money against your home’s equity. 

 

There are some key advantages to keep in mind. For starters, you can choose to receive money from your bank in the form of a lump sum or monthly payments. In other words, your bank will pay you a substantial amount of money in exchange for borrowing against your equity. 

 

You will essentially be converting the equity from your home into quick cash, which can be advantageous in certain situations. For example, if you need help covering unexpected medical costs or you want to live a more luxurious lifestyle, a reverse mortgage can be helpful. 

 

If you are 62 years or older and have a sufficient amount of equity in your home, you may qualify for a reverse mortgage. It is important to know that you will only be able to qualify for a reverse mortgage if you and anyone else on the deed to the property are all at least 62 years of age. You will still be obligated to pay your real estate taxes, homeowner’s insurance, etc. Although you will still have bills to pay, you’ll have a large quantity of cash at your disposal. 

 

What is a life settlement and how does it work?

 

Reverse mortgages aren’t the only way to free up a large amount of extra cash as a senior. You could also receive a large sum through a life settlement. Remember all of those premiums you paid on your life insurance policy over the years? Based on your age, health status, premiums, and the type of policy you have, you may have the option of selling your life insurance policy for a lump sum cash payout. 

 

The process itself is pretty simple. By selling your life insurance policy for a lump sum cash payout through a life settlement transaction, you will receive a cash payout that you can spend however you wish. 

 

If time is a concern, you should know that these transactions take longer to complete in states that regulate life settlements. Alabama, Missouri, South Carolina, South Dakota, Wyoming, and Washington DC do not regulate life settlements. It typically takes 6-8 weeks, and the timeline varies based on your insurance company and how quickly they provide the necessary documents to the licensed life settlement provider.

Which one is better?

Now that you know more about reverse mortgages and life settlements, you might be wondering which one is preferable. The answer depends on your circumstances and financial goals. 

 

For example, one drawback to a reverse mortgage is that you cannot qualify for one if you still have any outstanding liens on the home. If you still owe money on a conventional mortgage, you can’t get approved for a reverse mortgage. 

 

Typically, if you have a life insurance policy and are over 65 years old, have health problems or a terminal illness, need cash, or no longer need insurance, a life settlement may make sense for you. These are some of the compelling reasons why so many choose to cash out by selling their life insurance policy while they’re still alive to enjoy life!

 

Think of it this way. If you still owe money on your house, paying a mortgage, but you have been paying premiums for a life insurance policy for many years, you would be better off opting for a life settlement.   

Would it make sense to do both?

While reverse mortgages have some disadvantages compared to life settlements, you might be thinking about doing both if you are in dire need of cash. While taking out a reverse mortgage is a viable option for cash-strapped seniors, they need to understand that they will lose the equity in their homes.

 

The only thing that you will lose in a life settlement is the coverage provided by your life insurance policy. If you no longer need your life insurance policy or don’t want it, there is no reason to keep it. Moreover, there is no reason to continue to pay the premiums on your policy when you have the option to cash out. 

 

So would it be a good idea to take out a reverse mortgage and sell your life insurance policy? You should honestly only consider doing both if you are facing a severe financial emergency. A better idea would be to sell your home and sell your policy. 

Make it happen with MRE Finance.

 

MRE Finance is here to help you navigate the life settlement process with ease and answer any questions. Seniors trust MRE Finance for a reason. The team has over 25 years of experience with life settlements and believes in ethics to help clients begin their journey to financial freedom.

 

For a free estimate of your policy’s potential value, visit https://mrefinance.com/free-life-settlement-calculator/, call the team at 1-800-521-0770 or visit the website MRE Finance today and ask about how you can benefit from selling your life insurance policy!