New data from the American Advisors Group shows that the overwhelming majority of seniors do not intend to sell their homes in older age and have no intention of ever moving. 82% of seniors say they want to live in their home for the rest of their lives and 92% of seniors said they would prefer to live their later years in their current home rather than moving to an assisted living facility or nursing home the report says.
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AAG conducted the “Importance of Home Survey” with over 1,500 participants aged 60-75, and showed that nearly two in three seniors have an emotional attachment to their home and that 50% of America’s seniors saw the pandemic as a contributing factor to wanting to live at home stronger.
Nursing homes and assisted living facilities were some of the first, and most devastatingly hit during the peak of the COVID-19 pandemic. A strengthened desire in remaining in one’s home thus makes sense.
“Our studies have shown that seniors in this country have a strong attachment to their home and the pandemic only strengthened that bond,” said AAG Chief Marketing Officer Martin Lenoir. “It’s no secret that many seniors have built substantial equity in their homes after years of ownership, but what is interesting is that very few want to sell their house to obtain that money. For seniors, the comfort, safety and independence of their home outweigh the desire to move and that’s why we’re seeing so many older Americans interested in reverse mortgages.”
Reverse mortgages are an option offered by banks that, once you have built up substantial equity in a home, allow you to take out a loan out against yourself for cash. An important disclaimer: this is a very risky thing to do if not done correctly. This essentially gives the bank back piece by piece part of your home and in exchange, the bank gives you cold, hard cash.
This can be a great way, IF you have paid off almost 80% of your home or more, to set yourself up for cash flow in the later years of your life.
Christian Wallace, Head of Real Estate at Better says, “A reverse mortgage may make sense for seniors who will remain living in their home for the near future, as a reverse mortgage comes with closing costs, and who are able to continue paying property taxes, homeowner’s insurance, and maintenance costs that remain in place when you take out a reverse mortgage.”
While it can be great for some, it’s not a fit-all solution. Seniors might outlive their reverse mortgage and then have serious bills come due.
Wallace adds, “A reverse mortgage might not be ideal if you plan to move soon as the loan will come due, cannot afford the closing costs and ongoing property taxes, insurance and maintenance, or if you plan to pass your home to an heir, as they will have to pay off the existing loan.”
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This article originally appeared on GOBankingRates.com: 80% Of Seniors Are Not Selling Their Homes – Here’s The Financial Strategy They’re Using Instead