Tapping into Equity

A house is more than a roof over the head…
but a tool for financing retirement.

A growing number of retirees are tapping equity in their homes by taking out reverse mortgages. These loans never have to be repaid as long as the borrower lives in their home. Most use reverse mortgages to pay off their existing loans, wiping out their monthly mortgage payment. Others use them to draw a steady stream of cash out of their homes every month.

“It’s become more of a mainstream financial tool…becoming a household word,” said Bronwyn Belling, who manages education on reverse mortgages for AARP. “It frees up your money. It’s ridiculous to be sitting on equity and it’s not earning anything for you,” said John, who took out a reverse mortgage on his Oakmont house.

One Borrowers Return from the Edge of Foreclosure

Facing foreclosure, Anna n’ha Millee used a reverse mortgage to pull cash out of the property and pay off her lender. There was enough money left over for needed improvements on her investment property and restore lost income that led to her financial dilemma. “I was in total
panic - this meets my needs completely,” she said.

Reverse mortgages have gained popularity as retirees turn equity into cash… Paying off home loans, pulling out cash for living and health care expenses and making home repairs top the list. For the 69-year-old n’ha Millee, it’s all of the above. n’ha Millee didn’t qualify for a home equity loan. She didn’t want to sell the property, which has been in her family for more than 70 years.

“That’s why the reverse mortgage was so important for her,” said Jill Gromm, her loan agent. “She’s had two properties in her family for years and years and doesn’t want to lose them, but they’re aging.”  Petaluma officials determined (her investment property) uninhabitable. By December…lenders were set to take back the properties. Instead she was able to tap $276,000 in equity based on her age and the value of the home…she no longer has a mortgage on the primary property, leaving more money for daily needs. “I have the ability to buy the necessary food, and to meet my doctor’s bill. I can even go to the drug store and buy the prescription medicine that I need.”

–By Mike Coit, The Press Democrat