Many Americans will begin to receive money from the $1.9 trillion stimulus package that was just signed by President Biden. While this money will be a welcomed relief for many, it paints a bigger picture of the financial hardships which are being endured, especially among seniors. This immediate influx of cash may help short term; however, it’s important to prepare for long-term financial needs of retirement as well.
A survey by Transamerica for Retirement Studies found that those entering retirement age may not be as ready financially as they should be.
- 82% of those surveyed, indicated they plan to work, or are already working past age 65. Some do not plan to retire.1
- 52% cite income and health benefits as the reason.1
- 47% expect Social Security to be their main source of income during retirement.1
- $172,000 is the median amount saved in all household retirement accounts.1
For those who want to improve their financial outlook, a reverse mortgage may be the solution.
A Home Equity Conversion Mortgage, (HECM), commonly known as a reverse mortgage loan, is a Federal Housing Administration (FHA) insured loan2 which allows you to access a portion of your home’s equity. If you are at least 62 years old and have enough equity in your home, you may be able to get the cash you need. One benefit of a HECM is that there are no monthly mortgage payments.3 If you still have a mortgage on your home, it must be paid off using the proceeds from your reverse mortgage loan. If you don’t have a current mortgage, it increases the amount of money you may be eligible to receive.
Another option is a jumbo reverse mortgage which allows owners of high-valued homes that exceed the 2021 HECM limit of $822,375 access to more of the equity in their homes. Keep in mind that jumbo reverse mortgages aren’t insured by the FHA so some of the requirements might differ from HECM’s. Some jumbo reverse mortgages allow homeowners to access up to $4 million (varies by lender).
With both a reverse mortgage and a jumbo reverse mortgage, you won’t have to worry about making a monthly mortgage payment3 which can greatly increase your cash flow long term. If you are interested in utilizing your home equity as an additional source of funds in retirement, call 1-800-976-6211 to speak with a licensed loan advisor for more information.
2 As required by the Federal Housing Administration (FHA), you will be charged an initial mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance.
3 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.