A reverse mortgage is a loan for homeowners age 62 and older that allows seniors to access a portion of their home’s equity. The loan generally does not become due until the last surviving homeowner permanently moves out of the property or passes away. After the borrower is no longer living in the home, the estate may choose to either repay the balance of the reverse mortgage or sell the home to pay off the balance. Any remaining equity from the sale of the home is inherited by the estate. If the balance of the reverse mortgage loan is greater than what the home sells for the estate is not liable for the difference.
Economic insecurity among older adults is growing as more and more seniors enter retirement. The NYC Department for the Aging (DFTA), who is committed to helping older adults age in their homes and communities, states in their Plan 2025: Aging Services in an Era of Rapid Population Growth, New York’s 60 and older population will significantly increase to a projected 1.86 million by 2040, a 48.5% increase from 2000. The elderly will make up more than one in five New Yorkers by this time. Meanwhile, New York City’s poverty rate increased from 16.5% in 2000 to 18.1% in 2015. In 2015, the median household income for older New Yorkers was $33,917, lower than the nation’s median of $40,971. That same year, Social Security represented more than half the income for senior households in NYC. With these trends, seniors are challenged to meet the high housing costs in New York.NBC reports, “A retired single New York resident makes $17,000 each year from pensions, Social Security and other sources of income, according to WOW’s (Wider Opportunities for Women) Economic Security Database. This income, which is below the national average for the elderly, does not come close to the estimated $26,244 required annually if New York seniors were to live comfortably and with economic security.” According to NBC, mortgage payments and rent make up a large portion of seniors’ monthly expenses, and in states such as New York, where housing costs are higher than average, this has become a real financial burden for many struggling seniors. New York seniors are facing an uphill battle as medical and living expenses are increasing.
The New York State Office for the Aging (NYSOFA) serves as an advocate for over 3.7 million New Yorkers ages 60 and up. NYSOFA provides services such as legal assistance, consumer health care information, nutritional care, veteran’s assistance, financial and tax assistance, community programs to assist seniors, caregivers and family members, recreation, housing, energy, transportation and information and services. NYSOFA also has local offices to better serve residents with local resources. If you or someone you know is a senior who is struggling to make ends meet, your local NY State Office for the Aging may be able to offer assistance.
People generally like to stay in their own homes if it is physically and financially possible for them to live independently. Many seniors rely on their retirement income, which is likely to be based on a fixed income which may include pension, Social Security and personal savings. This is often not enough to afford in home care, major medical emergencies, or other unplanned financial strains should the need arise. A reverse mortgage loan may provide the necessary funds for seniors to afford to continue living in their own homes.
For eligible New York homeowners, a reverse mortgage loan could provide the financial assistance to allow them to stay in their own home while affording in home care, medical expenses or to make modifications to their homes for better accessibility. However, the borrower must continue to pay property taxes, homeowner’s insurance and maintain the home according Federal Housing Administration requirements.