Are you delaying retirement because you are in need of extra income? If so, you are not alone. A Gallup Poll shows that 35% of working adults plan to continue working past retirement age out of necessity. Forbes writer, Edward Siedle, writes,
“With the average 401(k) balance for 65 year olds estimated at $25,000 by independent experts – $100,000 if you believe the retirement planning industry – the decades many elders will spend in forced or elected “retirement” will be grim”.
If you’re ready for retirement but do not have the funds or savings to live comfortably, there are options that may help, such as a Home Equity Conversion Mortgage (HECM). A HECM is a reverse mortgage loan that enables seniors to access some of the equity in their home. Seniors choose how the funds are disbursed. The proceeds can be taken in a fixed monthly amount, as a line of credit or a combination of both options.
With a HECM loan, homeowners are able to live a more financially secure lifestyle without the stress of monthly mortgage payments1 . Many have also used a HECM loan to defer receiving their Social Security benefits and start saving money again. Because the funds from a HECM loan can be used however the borrower wishes, many retirees pay for necessary home repairs or renovations, create a safety net for unplanned expenses or even to travel and live the retirement lifestyle they’ve always dreamed of.
A HECM loan may also help you:
- Retire now, rather than continuing to work
- Lighten your financial burden
- Improve your monthly cash flow
- Create a safety net for unplanned expenses or emergencies
A Home Equity Conversion Mortgage can be used as a financial tool to help safeguard your financial future. Discussing all your financial plans and goals with a trusted financial adviser is highly encouraged. When considering a HECM loan, there are some requirements that must be met in order to be eligible:
Borrower Requirements
You must:
- Be 62 years of age or older
- Own the property outright or paid-down a considerable amount
- Occupy the property as your principal residence
- Not be delinquent on any federal debt
- Participate in a consumer information session given by a HUD- approved HECM counselor
Property Requirements
The following eligible property types must meet all FHA property standards:
- Single family home or 2-4 unit home with one unit occupied by the borrower
- HUD-approved condominium project
- Manufactured home that meets FHA requirements
The amount of funds you can receive from a HECM loan is based on the age of the youngest borrower, the current interest rate, and the lesser of the appraised value of the property, sales price or the maximum lending limit.