By Mathew Allen
In a recent survey, The NHP Foundation found that 42% of retirees worry on a daily basis about their ability to afford where they live. While that number may seem shockingly high, it makes sense when you look at some of the other financial stresses retirees are facing.
- In 2013, the National Council on Aging found that 33.8% of seniors currently have a mortgage, home equity line of credit or both.
- According to the Consumer Financial Protection Bureau more than half of retired homeowners spend 30% of their total income on housing related costs.
- The Motley Fool reported that 61% of those 50 to 64 had less than $50,000 saved for retirement.
- US News and World Report said that home maintenance runs about 1% to 4% of the home’s value per year. The median home value in Oregon is $302,000 which means maintenance costs for a median priced home costs between $3,020 and $12,080 a year.
With over one third of retirees still making a mortgage payment, half of retired homeowners spend one third of their income on housing costs, well over have of retirees have very little saved, and the cost of maintaining a home, it makes perfect sense that almost half of retirees are worried about their housing costs.
Besides winning the lottery, getting a large inheritance or going back to work, how can a senior homeowner reduce the worry, stress and anxiety their housing costs are creating? The answer for many seniors could be a reverse mortgage.
If a reverse mortgage were implemented, it could pay off a current mortgage, freeing up the monthly mortgage payment for additional cash flow. A portion of the homes equity could be set aside to pay the property taxes and insurance, freeing up additional cash flow. A line of credit could be set up which could be drawn on to pay for home maintenance, as well as other unexpected expenses. In other words, the reverse mortgage could alleviate most, if not all of the stress and worries seniors are facing with their housing costs.
Unfortunately, most seniors will never take the time to investigate a reverse mortgage due to things they “heard” about reverse mortgages that just aren’t true. They’ve heard things like: the bank gets the home when you die; not true. Or, you could owe more than the home is worth; not true. And my favorite which is you could stick your heirs with a big bill; not true.
If reverse mortgages are so great, how come more people don’t take advantage of them? The answer is that there is a lot of fear, confusion and misinformation surrounding the product. I truly believe if more people took the time to investigate what a reverse mortgage is, how they work, the safeguards that are in place and how they could implemented and used, many more people would be taking advantage of them. If you are worried about the costs and affordability of your home, I would highly encourage you to take the time to learn more about the reverse mortgage.
Call me today for a free custom tailored reverse mortgage analysis at 541-773-3131. Or give me a call with any questions you may have about the loan. I am happy to help in any way I can.
I look forward to hearing from you.
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