February 25, 2016
Home Equity: a Retirement Resource
The National Council on Aging (NCOA) has redesigned its website providing information for “house rich but cash poor” older people who want to think about tapping their home equity.
Home equity – the house’s market value minus the amount owed on the mortgage – remains a largely unused source of income that many older Americans could be putting toward their medical care or to improve their lives.
Home equity held by Americans age 62 and over reached $5.76 trillion last year – an increase of nearly 30 percent since 2013. A marker of how much of this retirement resource remains untapped is the small number of federally insured reverse mortgages – about 50,000 – that seniors take out every year against the value of their home equity. Reverse mortgages, which are available to homeowners at age 62, are equity loans that do not have to be repaid until the senior permanently leaves their home.
NCOA’s website provides extensive information useful to retirees who want to explore their options for using home equity, including:
- Whether remaining in the house is the right option and tips for doing so.
- A booklet, “Use Your Home to Stay in Your Home” – in English and Spanish.
- How reverse mortgages and the program’s required financial counseling work, including a comparison of the advantages and disadvantages of these and other types of loans.
- Alternative housing, which ranges from living with family to moving into an assisted living community.
Other online information about using home equity:
- A booklet by the Center for Retirement Research, which supports this blog, “Using Your House for Income in Retirement.” This includes a discussion of the considerations for downsizing, as well as reverse mortgages.
- A blog updating readers on rules governing reverse mortgages.
- A reverse mortgage calculator recommended by the NCOA.
- Click here to read more on the NCOA’s website.