Many seniors nearing retirement would love to be debt-free, but the reality is many may carry debt into retirement. Whether their debt comes from housing, credit card, or loans, it can cause stress and lead to a lower quality of life and raise concerns about their financial security. Seniors aged 65 and older represent a large and growing part of the U.S. population which may require retirees to devote a larger share of their fixed income towards paying off their debt.1
Reverse Mortgage: Debt Consolidation2
A 2019 report uncovered that the percentage of debt for senior households 65 years and older, increased from 37.8% in 1989 to 61.1% in 2016. The amount of outstanding debt jumped from $7,463 to $31,050 (2016 dollars).1 If you are looking to manage your financial stress, a reverse mortgage may be able to help consolidate your debt.
A reverse mortgage loan allows borrowers to take part of their home equity and turn it into loan proceeds. Many borrowers use a reverse mortgage to pay off their current mortgage loan which eliminates their monthly mortgage payment and can provide much-needed extra cash flow.2 You can even use the proceeds of your reverse mortgage to consolidate your high-interest credit cards and other loans. For those with substantial equity in their homes, borrowers may have the option to establish a line of credit, receive monthly payments, or even just additional cash.
If your debt is causing you financial stress call (800) 976-6211 to speak with a licensed loan advisor to see if a reverse mortgage can help.
Disclosures:
1 https://fas.org/sgp/crs/misc/R45911.pdf
2 Your HECM loan will accrue interest that together with principal will have to be repaid when the loan becomes due.
3 Your current mortgage, if any, must be paid off using the proceeds from your HECM loan. You must still 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.