According to a new study from Boston College’s Center for Retirement Research, a third of retirees get 90 percent or more of their income from social security. For most people, that’s not enough income to provide a relaxing retirement. What baby boomers may not realize is that, combined, they have more than $12 trillion in home equity. And that number has been quickly climbing. The value of these homes have risen in the past twelve quarters, according to the National Reverse Mortgage Lenders Association. Currently, these homes are valued at just one percent below the all time high in quarter four of 2006.
Americans age 62 and older may want to tap into that home equity via a reverse mortgage. Reverse mortgages take part of the equity in a home and convert it into payments to the homeowner. According to the Federal Trade Commission, reverse mortgages are popularly used by people who want to pay off their mortgage, supplement their income or pay for healthcare expenses. According to a survey by the industry, two-thirds of borrowers are using the reverse mortgage to pay down debt (including conventional mortgage debt).