Americans are unprepared for retirement. The Employee Benefit Research Institute found that the annual income short-fall for retirees is averaging between $19,000 for married household to $33,778 for single males and $62,734 for single females.
An increasing number are turning to their other greatest source of wealth to fund their longevity: home equity. Reverse mortgages give homeowners 62 or older the ability to take equity out of their home, tax-free; the money can be used to pay off existing mortgages and receive extra cash in the form of a lump sum or monthly payments.
Under the umbrella of reverse mortgages, is a home equity loan which the borrower does not need to repay. The Federal Housing Administration refers to these as Home Equity Conversion Mortgages or HECM.
Using programs like this can potentially create liquid financial assets to help sustain a retirement. As for traditional mortgages, conforming no point 30-year fixed mortgage rates are averaging 3.875 percent and 15-year rates are near 3.125 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381–8888 and your question may be featured in an upcoming article.