Recent studies show that many older Americans are not as prepared for retirement as they should be, but one area that may be able to help their retirement savings is their home equity, according to a recent Bankrate.com article.
Even among homeowners who have saved less than $100,000 for retirement, 70% own a home, according to the LIMRA Secure Retirement Institute, cited in the article. Even more, a whopping 90% of Americans who have more than $100,000 saved for retirement own a home.
Many people who are in dire straits are being forced to run short on cash or sell stocks, bonds or other investments even if the market is not doing too well, the article explains.
A reverse mortgage may be a helpful tool for gaining extra funds in retirement if the homeowner is over the qualifying age of 62 and has a sufficient amount of equity in their home.
“Far more people qualify for a reverse mortgage than for a loan to purchase a home, because borrowers don’t have to be able to afford principal and interest payments,” the article states.
Choosing a line of credit as the method to receive the reverse mortgage funds is suggested, as it can grow the credit limit over time, if it isn’t all spent at once.
Though reverse mortgages used to be thought of as something to stay away from, the new government regulations have kept people who can’t afford reverse mortgages from getting them. Now, they are being strategically used, and when put together with retirement planning, they can be a practical solution to make sure retirement is covered.
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Written by Alana Stramowski