It is projected by 2030, for the first time in U.S. history, older adults will outnumber children. By 2030, it is projected, for the first time in U.S. history, that older adults will outnumber children. The Census Bureau reports that 77 million people will be 65 years and older in 2034, compared to 76.5 million under the age of 18.1 By 2060, nearly 1 in 4 Americans will be 65 and older, and the number of 85 and over will triple, and the country will add a half million centenarians.2
With this expected population growth for older adults, there may come a point when they will require some type of long-term care. A recent report reveals the median price tag for assisted living is $54,000 a year, a private nursing home room costs $108,405, and home care aid for five days a week, eight hours a day runs $56,160.3
With the possibility of healthcare costs consuming a significant part of retirement savings, having a plan in place for when these expenses arise. A reverse mortgage loan allows homeowners 62 and older to access a portion of their home’s equity as cash while continuing to live independently in their homes. The proceeds from a reverse mortgage can assist with long-term care if one of the spouses needs immediate care and help with expenses associated with in-home skilled care.
How Can a Reverse Mortgage Help?
- Eliminate Monthly Mortgage Payments4: Homeowners can increase their monthly cash flow by eliminating their current regular monthly mortgage payment, allowing them to focus on other financial obligations.
- Access to a Low-Cost Line of Credit5: With an adjustable-rate HECM, there is the ability to draw from a line of credit at any time (in any amount) until the line of credit is exhausted, or let it sit and grow over time, allowing access to additional cash if the home value increases.
- Receive Funds in a Lump Sum6: With a fixed-rate HECM, you have the option to receive a portion of your home’s equity in a lump sum, often to pay for medical expenses or to consolidate debt.
- The Ability to Age in Place7: A HECM allows you to age in the comfort of your homes while maintaining ownership and the title.
Interested in learning more about how a reverse mortgage can help with medical or healthcare expenses? Call (800) 976-6211 to speak with a licensed reverse mortgage advisor.
Disclosures
1 https://www.census.gov/newsroom/press-releases/2018/cb18-41-population-projections.html
2 https://www.census.gov/library/stories/2018/03/graying-america.html
3 https://www.genworth.com/aging-and-you/finances/cost-of-care.html
4 Your current mortgage(s) and any other existing liens against the property must be paid off at or before closing. 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.
5 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.
6 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. This disbursement option is only available for a fixed rate loan.
7 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.
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