Many Americans may be operating under the assumption that they will have fewer expenses in retirement. However, the opposite could be true once you factor in medical and housing costs. With Social Security often covering only about 40% of former wages, baby boomers may experience a gap in funds. A recent study found that 66% of seniors did not feel that they have saved enough for retirement.1
Seniors looking to enhance their income and improve their retirement experience have a plethora of options to consider. To better afford the lifestyle of choice in retirement, some may choose to maximize retirement contributions early on, extend the length of their careers, plan for side jobs, or even start a small business. Another option for those who have enough equity in their home is to take out a reverse mortgage loan. A reverse mortgage can help seniors by eliminating monthly mortgage payments2 as well as setting aside funds to draw from.2
A few ways a reverse mortgage can help in retirement:
- Eliminate monthly mortgage payments2
- Supplement monthly cash flow
- Take cash out as a lump sum3
- Access to a growing line of credit4
- Consolidate and/or pay off debts5
- Pay real estate taxes and property insurance6
- Pay for home repairs or accessibility improvements6
Are you concerned that you won’t have enough funds in retirement? Call (800) 976-6211 to speak with a licensed reverse mortgage specialist to go over your options.
2 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.
3 The funds available to the borrower may be restricted for the first 12 months after loan closing, due to HECM reverse mortgage requirements. In addition, the borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.
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.
5 Your HECM loan will accrue interest that together with principal will have to be repaid when the loan becomes due.
6 Mandatory obligations are those fees and charges, as defined by the U.S. Department of Housing and Urban Development (HUD), incurred with the origination of the HECM loan that are paid at closing or during the first 12-month disbursement period. This includes but is not limited to: existing liens on the property; the loan origination fee; counseling fee; upfront MIP; third-party closing costs; customary fees and charges for warranties, inspections, surveys, engineer certifications; repair set-asides; set-aside for property taxes and insurance; and delinquent federal debt.