Older homeowners unlikely to use home equity loan before retirement, survey finds

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As home prices rise, older Americans have the opportunity to use their home equity for retirement. (iStock)

According to a recent Finance of America Reverse (FAR) survey, older homeowners are much less likely than younger generations to take equity out of their homes.

A large majority of the Silent Generation (94%) and Baby Boomers (89%) responded that they were unlikely to use home equity line of credit products. Many of them also noted a lack of knowledge about the benefits of the products.

The survey data comes as homeowners aged 62 and over held a record $10.6 trillion in home equity in the fourth quarter of last year, according to a report from the National Reverse Mortgage Lenders Association (NRMLA). ).

“An overwhelming majority of older Americans do not consider their home equity in their approach to retirement, but many should,” FAR President Kristen Sieffert said in a statement. “That’s why it’s crucial that we continue to illustrate how they can tick off more items on their punch list, including securing their golden years, by integrating this asset into their retirement strategy.

“For thousands of American homeowners, a home equity product such as a reverse mortgage can be the key difference in a plan that allows them to thrive successfully through volatile years,” Sieffert said.

If you want to tap into the equity in your home, you can consider cash refinancing. Visit Credible to find your personalized interest rate without affecting your credit score.

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Older Americans can use equity amid historic home values

Home values ​​have reached record territory in recent months. Prices jumped 18.3% annually in June, marking the 125th straight month of annual increases, according to the latest CoreLogic Home Price Index (HPI).

More than three-quarters (86%) of FAR survey respondents said the value of their home had increased since they bought it. And older owners can take advantage of that increase in net worth to fund their retirement or pay other bills, Seiffert said.

“Older homeowners have an incredible opportunity in today’s housing market to tap into a vital alternative source of financing,” Seiffert said. “When you consider that many older Americans live on fixed incomes and are likely to dip into heavily depreciated retirement accounts to pay their bills, tapping into their home equity may make sense given historical levels of home valuation.

If you want to take money out of your home, you can consider cash refinancing. Visit Credible to compare multiple mortgage lenders at once and choose the one that’s right for you.

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Owners say preparing for retirement is top priority

FAR survey respondents indicated a strong desire to save and plan for their future retirement, and perhaps even retire early. However, many also said they felt anxious about whether they would be able to save enough money.

The top financial priorities of all respondents included the desire to save for the future (39%) and the desire to save for retirement (35%). Other financial priorities included wanting to increase their emergency savings (26%) and wanting to get out of debt and/or pay off debt (25%).

When it comes to retirement plans, 68% of respondents expressed a desire to retire and age in place. Many respondents also said they would like to receive more financial advice on debt management. And others said they would be interested in a home equity loan if they knew more about it.

“Given respondents’ desire to repay and better manage their debt, coupled with an interest in learning more about their home equity, there may be an opportunity to build awareness of home equity solutions. and provide financial advisors with more information to support client goals,” FAR said in its survey.

If you want to learn more about removing equity from your home, contact Credible to speak with a home loan expert and get all your questions answered.

You have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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