It is 2014 and more than 10,000 Baby Boomers are retiring each day! And its no surprise that they are focusing on their housing options. A new AARP survey, shows that 85% of elderly adults want to stay in their own home as opposed to being placed in nursing homes or assisted living communities. The only problem is money. Active, healthy seniors have the difficulty of keeping afloat through the rising cost of living.
Let’s face it, health care costs are increasing and unfortunately retirement plans of millions are getting smaller. Having access to their homes equity with a reverse mortgage is very appealing to those seniors that want to stay in their own home. With modern healthcare, seniors are living longer and baby boomers reverse mortgages to supplement their retirement.
A Reverse Mortgage is becoming a lifeline for these seniors that want to stay put. A Reverse Mortgage differs from a traditional mortgage in that the loan must be repaid in full when the homeowner is no longer living in the house. The concept is, homeowners are borrowing against the equity they have in their house. Then, they have options as to how they will receive their loan: a line of credit, monthly payments, and the ever so tempting lump sum of cash. The Federal Housing Administration’s Home Equity Conversion Mortgage program backs the most common of these loans.
To ensure that the client is capable of receiving the loans, credentials must be met and from that point forward they usually enter the process as referrals. Financial Planners are becoming popular first steps in the process. This is advisable assuming the FP has your best interest and is not trying to make a quick buck. Many seniors that try to enter the program are not in a well enough state financially to keep up with the maintenance and taxes that still must be paid by the homeowner, post loan.
Luckily, the government has place more stringent regulations on the process enabling less seniors to fall into irreversible debt. Reverse Mortgages are an excellent option for those 62 and older, with equity in their home and are seeking to live their remaining years comfortably in their deeply rooted homes.