A report by the National Reverse Mortgage Lenders Association (NRMLA) announced that homeowners ages 62 or older saw their home equity increase by a combined 2.4 percent, or $6.42 trillion, in the second quarter of 2017. This is up from $6.27 trillion in the first quarter of the year.
The report also notes housing wealth for retirement-aged homeowners was driven by an estimated 2.1 percent (or $162 billion) improvement in senior home values. This was offset by a 0.8 percent increase of senior-held mortgage debt that equaled $12 billion. Meanwhile, the RiskSpan Reverse Mortgage Market Index (RMMI) measurement noted home equity held by older homeowners rose to a score of 230.17 in the second quarter, another all-time high since the index was first published in 2000.
An increase in housing wealth and home equity is good for all homeowners, but it’s particularly welcome for the aging demographic as it struggles with rising healthcare costs that come with maturity. NRMLA notes older Americans can expect to spend between $200,000 and $400,000 in out- of-pocket medical expenses during retirement.
This added housing wealth can provide some much-needed relief to these rising healthcare costs, which not only include unexpected injuries and illnesses, but caregiving and even assisted-living facility use. It is situations like this that make reverse mortgages such a necessary product within our industry. A research study from the Ohio State University noted that 14 percent of reverse mortgage borrowers applied for this program with the intention of using the proceeds to pay ongoing health or disability expenses.
Naturally, compounding medical expenses aren’t the only wise use for housing equity. Reverse mortgages can also allow older homeowners to provide more assistance to their adult children and to supplement retirement savings. The benefits of reverse mortgages are many. Make sure your clients area aware of all the advantages they may be missing out on with this untapped equity.