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If you needed money you could mortgage the house. The house I owned 30 years ago I paid $35,000 for and it is worth $200K today
No, you can't. That's the issue in a nutshell. Seniors on fixed incomes whose major asset is the equity in their house can't obtain a mortgage to access that money.
Just saw this thread, and I'd like to comment too.
I favor paying off the home and lessening monthly outlay, if possible for the homeowner. To me, having the monthly expense significantly reduced is the best way to go.
For those who have a mortgage balance that is too big to reasonably pay off, and are finding their monthly expenses becoming too difficult to comfortably handle, I think reverse mortgages are OK. This assumes the retiree plans to stay in the home pretty much until the end. I know all about the high fees associated with this process, however it has two significant benefits for those in a tight situation and paying a mortgage. First off, you get some monthly income, but more importantly you stop the monthly mortgage payment obligation.
Not an ideal situation, but it helps bridge the gap to allow folks to have a more reasonable life style.
if you still have a mortgage you may not have enough equity left to even get a reverse mortgage against. they dont lend very high, usually only 40-60% of the value after subtracting out any mortgages that have to be paid off .
if you still have a mortgage you may not have enough equity left to even get a reverse mortgage against. they dont lend very high, usually only 40-60% of the value after subtracting out any mortgages that have to be paid off .
If you "capture" your equity and blow it, you have nothing when retirement comes
Just saw this thread, and I'd like to comment too.
I favor paying off the home and lessening monthly outlay, if possible for the homeowner. To me, having the monthly expense significantly reduced is the best way to go.
For those who have a mortgage balance that is too big to reasonably pay off, and are finding their monthly expenses becoming too difficult to comfortably handle, I think reverse mortgages are OK. This assumes the retiree plans to stay in the home pretty much until the end. I know all about the high fees associated with this process, however it has two significant benefits for those in a tight situation and paying a mortgage. First off, you get some monthly income, but more importantly you stop the monthly mortgage payment obligation.
Not an ideal situation, but it helps bridge the gap to allow folks to have a more reasonable life style.
Just want to make sure you realize what the OP is about. It is not about the right decision to pay off or not to pay off. It is about home equity being part of a retiree's net worth and how, if and when to possibly try to capture it to help your retirement cash flow. Certainly for many there is no reason to for many there is considerable reason to. Certainly with no SS increase this year and medical cost going up some seniors are being stretched even further.
I think bottom line is home equity especially if your living in it is very difficult to extract in an efficiant manor . yes it can be done but only as a last resort.
if you sell , move some where else and have money left over fine, but if its still your home or you have to buy another for around the same amount then not a good idea
The full report from the OP article with a blip from the summary of the report linked in the OP article: http://www.soa.org/files/pdf/researc...ing-market.pdf
The six Middle Mass segments (excluding 45 to 54 year-olds) represent 46% of the 32.2 million total Middle Income market households, and roughly 38% of the total net worth. Over half of these households are married, with the largest group (5.2 million) being married households aged 55 to 64. These households are likely to have relatively simple needs and a modest base of wealth from which to plan their retirement. They will need sound advice from either product providers or other financial sources in order to achieve their retirement aspirations. The 6.7 million single households will likely have a primary focus on generating sufficient retirement income and on providing for health care and other retirement contingencies. Optimal retirement solutions for Middle Mass households will incorporate specific household characteristics (e.g., health status, retirement literacy, specific retirement objectives) while maximizing the efficient use of assets and other income sources.
http://www.soa.org/files/pdf/researc...ng-market.pdf:
The six Middle Mass segments (excluding 45 to 54 year-olds) represent 46% of the 32.2 million total Middle Income market households, and roughly 38% of the total net worth. Over half of these households are married, with the largest group (5.2 million) being married households aged 55 to 64. These households are likely to have relatively simple needs and a modest base of wealth from which to plan their retirement. They will need sound advice from either product providers or other financial sources in order to achieve their retirement aspirations. The 6.7 million single households will likely have a primary focus on generating sufficient retirement income and on providing for health care and other retirement contingencies. Optimal retirement solutions for Middle Mass households will incorporate specific household characteristics (e.g., health status, retirement literacy, specific retirement objectives) while maximizing the efficient use of assets and other income sourcesThe six Middle Mass segments (excluding 45 to 54 year-olds) represent 46% of the 32.2 million total Middle Income market households, and roughly 38% of the total net worth. Over half of these households are married, with the largest group (5.2 million) being married households aged 55 to 64. These households are likely to have relatively simple needs and a modest base of wealth from which to plan their retirement. They will need sound advice from either product providers or other financial sources in order to achieve their retirement aspirations. The 6.7 million single households will likely have a primary focus on generating sufficient retirement income and on providing for health care and other retirement contingencies. Optimal retirement solutions for Middle Mass households will incorporate specific household characteristics (e.g., health status, retirement literacy, specific retirement objectives) while maximizing the efficient use of assets and other income sources
Just want to make sure you realize what the OP is about. It is not about the right decision to pay off or not to pay off. It is about home equity being part of a retiree's net worth and how, if and when to possibly try to capture it to help your retirement cash flow. Certainly for many there is no reason to for many there is considerable reason to. Certainly with no SS increase this year and medical cost going up some seniors are being stretched even further.
My response was in light of the OP. My statement had to do with how some could optimize the use of their equity. In one case, you use it to lower your monthly expenses, yet still retain it for any future contingent expenditures, or to pass it on to your heirs.
In the other case, it is to capture it as a means to make your monthly living easier.
Both perspectives have to do with potentially using your equity to make retirement easier.
if you still have a mortgage you may not have enough equity left to even get a reverse mortgage against. they dont lend very high, usually only 40-60% of the value after subtracting out any mortgages that have to be paid off .
I'm not specifically advocating it, but it still can be an effective means of drawing out your equity from a home.
Having actually helped a couple of folks obtain these reverse mortgage, I have found they rather like the results. I have found them rather easy to obtain for elderly folks, and the termination of the monthly mortgage payment has made their lives significantly easier. The tax exempt monthly income makes it even more of a bonus, in one case we had a $1,200 a month swing (stop mortgage payement plus monthly income) and in the other I believe it was about $1,700.
That makes the golden years a lot easier for folks on a really tight budget.
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