As Congress looks for ways to trim down the nation’s deficit, many American households—especially older ones—are also tightening their belts as they prepare for retirement.
The economic downturn has left middle class seniors with their own deficit in the form of a loss of security, says an AARP report based on December 2011 research regarding how seniors are dealing with new economic realities.
Older Americans are facing an uncertain retirement because of eroded finances—some had to prematurely dip into their savings or retirement accounts—and many are apprehensive about their future security.
AARP interviewed Americans aged 50 and older with annual incomes between $35,000 and $75,000 and found that many had experienced losses of income, employment, and savings in the years following the economic downturn.
As a result of the Great Recession, some of the respondents have had to work longer than they had anticipated because they felt they didn’t have enough savings for a secure retirement. Many had to use their savings just to pay for their day-to-day living expenses.
Interruptions in steady income—generally due to job loss—have had a major influence on seniors’ loss of financial security.
Concerns ranged from paying bills to keeping up with mortgage payments and being able to afford health insurance or healthcare costs.
Out of those surveyed, many stressed they planned to rely heavily on Social Security and Medicare in retirement. Those who were still too young to claim these benefits told AARP they were “barely hanging on” until they could qualify, joining those who expressed fear they might “fall out of the middle class.”
If you’re like many others who are struggling to make ends meet but aren’t yet Medicare-eligible or ready to claim Social Security benefits, you may want to consider tapping into your home equity through a reverse mortgage.
The Federal Housing Administration’s (FHA) Home Equity Conversion Mortgage (HECM) program allows eligible homeowners aged 62 and older to access the equity they’ve built up in their home in the form of a HECM reverse mortgage loan.
The amount of money you can receive depends on a number of factors including age, current interest rates, type of loan chosen and the lesser of the appraised value of your home, sale price or the maximum lending limit.
Borrowers can choose to receive their loan proceeds in several different ways. Through the HECM Standard LIBOR product, you can choose to receive monthly term or tenure payments, or obtain a line of credit.
You can also receive a lump sum amount using the HECM Saver program, which charges a smaller upfront mortgage insurance premium in exchange for a smaller loan amount. The HECM Saver variable reverse mortgage also offers monthly payments or a line of credit.
As a reverse mortgage borrower, you could use your proceeds in whichever way you choose, whether it’s to buy groceries, pay for medication, or afford your monthly utility bills. Like any homeowner, you are still required to stay current on your homeowners insurance and property taxes, as well as maintain the home according to FHA guidelines.
Are you interested in finding out more about how a reverse mortgage could help improve your financial stability? Contact us today.