By Genie McGee, Reverse Mortgage Planner
While all the attention seems to be on millennial home buyers, it is important to also focus on the other end of the spectrum – Baby Boomers! Increasingly, tapping growing housing equity via a Reverse Mortgage loan is a viable option. There are eight issues that most Baby Boomers have to face as they enter Retirement.
I call them my Baby Boomer Eight:
- Longevity: The Social Security Administration estimates 10,000 people turn 65 every day! Many are facing a 30+ year retirement. They are currently the fastest growing demographic, set to grow exponentially to 72 million by the year 2030 or 18% of the population according to the Pew Research Center. The question is: “How will they fund their retirement longevity?”
- Lifestyle: Those aged 62+ are not your typical older adults! They are seeking quality of life and are skiing, traveling, dating AND buying houses! More and more Baby Boomers realize they need to leverage what they have to live the lifestyle they want. One thing is sure: It takes money to fund the lifestyle.
- Liquidity: Home Equity is growing in the US, as housing values come roaring back from the economic downturn and housing bust. Six Trillion is tied up in equity in USA. The only way to access home equity is via selling the home or doing a mortgage to turn the equity into cash. Traditional mortgages have a required monthly mortgage payment. Reverse Mortgages do not; although payment of taxes, insurance and maintenance is required.
- Long Term Care: It has been reported by the Wall Street Journal that the US Department of Health and Human Services says only 7% of Americans has Long Term Care insurance, though it’s estimated up to 70% will actually need it. This need for eventual care is a retirement crisis about to happen. Reverse Mortgages can free up money to pay for long-term care needs.
- Lack of Savings: Americans are notorious for their lack of savings for retirement. The downturn in 2008 and the years following did not help, as 401Ks and other investments plummeted. Unfortunately, older adults did not have the time to allow those investments to make up those losses, as the first of the Baby Boomers turned aged 62 in 2008! Housing equity can help to make up those funding gaps by converting equity to cash.
- Location: Those who believe older adults are not buying homes need to adjust their thinking. The National Association of REALTORS reported that 700,000 homes were sold to those aged 62+ in 2015. The #1 reason for moving is to be close to grandchildren. The Reverse Mortgage for Purchase allows qualified borrowers aged 62+ the ability to buy a home and pay a one time down payment, the amount of which varies depending on the borrower’s age, interest rate and purchase price. They would then not have mortgage payments for the rest of their life, as long as they abide by all loan terms, including paying property taxes, insurance and all other property charges, maintain the home, and occupy the home as their primary residence. Many are using this captivating and smart leverage to buy a new, more appropriate home for aging in place; one that supports their longevity.
- Loneliness: Social interaction and connections is a greater predictor of thriving while aging than is exercise or diet. Aging in place becomes a big issue, as older adults usually prefer to live where their friends, church and family are close by. Being able to access housing equity through a Reverse Mortgage may allow this to happen and alleviate the lack of friends and important connections.
- Legacy: “A good man leaves an inheritance to his children’s children…” Proverbs 13:22a. According to Wade Pfau, in his book REVERSE MORTGAGE: How to use Reverse Mortgages to Secure Your Retirement, this proverb can actually come to pass, as the Reverse Mortgage may allow other assets to stay invested and grow. The HECM Line of Credit, which is backed by the FHA, can be used as a Stand-by Line of Credit that actually has a growth feature (applies to the unused funds in the credit line). The opportunity for retirement to be successfully funded and have more money left as an inheritance is greatly increased when housing equity is used strategically.
Contact: Genie McGee – Fairway Independent Mortgage Corporation
Direct: (404) 388-1885
Copyright©2017 Fairway Independent Mortgage Corporation (“Fairway”) NMLS#2289. 4801 S. Biltmore Lane, Madison, WI 53718, 1-877-699-0353. All rights reserved. Fairway is not affiliated with any government agencies. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Reverse mortgage borrowers are required to obtain an eligibility certificate by receiving counseling sessions with a HUD-approved agency. The youngest borrower must be at least 62 years old. Monthly reverse mortgage advances may affect eligibility for some other programs. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Georgia Residential Mortgage Licensee. GA Mortgage Lender License #21158