A Mortgage in Retirement
accurate as of
February 13, 2019
in Blog

A Mortgage in Retirement

Mortgage In Retirement

If you are among the 27% of retirees whose debt is negatively impacting your ability to live comfortably,1 your relaxing retirement might be overshadowed by financial stress. Many seniors actually carry their mortgage into retirement. In fact, 44% of Americans between the ages of 60 and 70 have a mortgage when they retire; and, 17% say they may never pay it off.2 A reverse mortgage in retirement may be able to help alleviate this stress.

How Does It Work?

A reverse mortgage allows qualified homeowners, who are 62 or older, to access a portion of their home equity as cash. Reverse mortgage borrowers do not have to repay the loan as long as they live in the home as their primary residence, pay property taxes and insurance, and maintain the property according to the Federal Housing Administration (FHA) requirements.3
The amount of equity you may qualify to access is determined by the age of the youngest borrower, current interest rates, your ability to manage your financial obligations, and the value of your home. You may need to set aside additional funds from loan proceeds to pay for taxes and insurance.

How Else Can It Help?

Increase Cash Flow: You may be able to replace your current mortgage with a reverse mortgage, which will eliminate your monthly mortgage payment3 and increase your cash flow. For example, if your current mortgage payment is $1,500 a month, eliminating that monthly payment frees up $18,000 annually that you can use any way you want.

Cover Monthly Expenses: You can choose to receive the proceeds from a reverse mortgage as monthly payments. This is helpful if you are having trouble covering your ongoing living expenses.

Make Repairs To Your Home: You may be able to use the money from a reverse mortgage to repair or renovate your home. This is especially useful if you wish to age in place but need to make modifications to improve the ease and accessibility around your home.

Set-Up An Emergency Fund: You may also choose to establish a line of credit with your loan proceeds. The reverse mortgage line of credit grows over time 4 and is available any time you need it. You can draw in any amount until the line of credit is exhausted. This option is often used by seniors who are concerned that they don’t have enough savings for future occurrences.

If you are carrying financial stress into retirement, a reverse mortgage may be able to help. Call 1-800-976-6211 to speak with a licensed loan officer who can answer your questions and provide you with an estimate of how much you may receive.

Important Disclosures:
1 Employee Benefit Research Institute 2018 Retirement Confidence Survey. https://www.ebri.org/docs/default-source/rcs/1_2018rcs_report_v5mgachecked.pdf?sfvrsn=e2e9302f_2
2 Many Retired People Don’t Expect to Pay off Mortgages. AARP.https://www.aarp.org/money/credit-loans-debt/info-2018/retired-paying-off-mortgage-fd.html
3 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
4 The reverse mortgage loan balance grows at the same rate as the available line of credit. Line of credit growth occurs and is only a benefit when a portion of the line of credit is not used. The unused line of credit grows over time and more funds become available during the life of the loan.