Two new reports from the National Council on Aging examine how home equity can impact cash flow and enable more older adults to age in place.
The first report – Cash Flow Challenges and Homeownership in Later Life – examines cash flow using the Elder Index to assess whether 62+ households have adequate income to cover their bills. The report notes, “Those who have housing wealth could buffer against a destabilizing financial shock with a home equity loan. A reverse mortgage can also help, since these loans further improve cash flow by eliminating the need to make monthly mortgage payments.”
The second report – Using Home Equity to Sustain Cash Flow for Aging-in-Place – looks at cash flow challenges using data from 70,089 Home Equity Conversion Mortgage (HECM) counseling sessions conducted in 2017 and then compares those findings with 62+ households in the general population. Among the key findings:
- 67.8 percent of all HECM counseling households considered a HECM for debt reduction. About two thirds (63.7 percent) had existing housing debt, versus 29.4 percent of homeowner households ages 62 and older in the general population;
- 11.9 percent had no debt and intended to use a HECM to help cover daily expenses. In this group, 42.6 wanted to increase their quality of life, and 36 percent wanted to make home repairs or renovations; and
- One in ten households considering a HECM (9.6 percent) had no apparent cash flow challenges, nor were they economically insecure.