I have been in the mortgage industry for more than two decades and have been working with reverse mortgages for about 12 of those years. Working in this space for so long, I thought I knew the ins and outs of a reverse mortgage, but it wasn’t until I experienced one firsthand that some things really hit home for me.
So many people have questions about reverse mortgages: how do they work? Are they the right choice? Can there be downsides? Since reverse mortgages generally are not talked about like traditional forward mortgages are, I want to walk through my experience with my parents’ reverse mortgage and talk about lessons I learned — even as someone who already had inside knowledge.
What happened
There are so many reasons that homeowners may seek out a reverse mortgage: funding retirement, sending kids to college, financing large purchases during retirement and the list goes on.
For my parents, specifically, they were aging and approaching retirement and were simply looking for ways to be more financially secure. They had retirement income but wanted an extra layer of financial protection while eliminating their mortgage payment.
This created a win-win for my parents and is a common reason older homeowners use a reverse mortgage: to leverage their home equity.
What I know
As someone who has worked in reverse for a long time, I knew that a reverse mortgage would give them peace of mind without putting their house at risk. A line of credit would simply allow them a safety net if the need ever arose.
I also knew a reverse mortgage would be a “set it and forget it” option, as there would be minimal interaction with the servicer — no mortgage payments, no due dates, no late payments, no phone calls, etc. For my parents, I knew it was important that they didn’t have a ton of back and forth to worry about or any additional due dates they needed to remember.
What I learned
As someone who was already well-versed in reverse, I knew there was still more to learn especially now that it was personal. I believe that experience is one of the best teachers and I am hopeful that my experience helps reverse lenders better serve their borrowers.
The first and most important lesson I learned is that borrowers will need education. In both forward and reverse lending, it’s common to have first-time borrowers that need to learn about the process they’re going through. While reverse mortgages are meant to be hands off, it was helpful to be hands on with helping my parents understand their loan options.
In my parents’ case, they faced a cultural/linguistic barrier that I was happy to help with, however, there were elements of a reverse mortgage that they – or anyone – would need some help to understand. For example, when they got their first annual recertification letter from the loan servicer, it worried them. They were not sure what it meant or what they should do about it.
After I explained the purpose and that it was routine, they were more comfortable and knew it would be coming each year.
Helping provide answers
Occasionally, they would have other questions they needed help with. For the borrowers that don’t have family that is a resource on reverse, they need to know they can reach out to their lender or servicer with questions. The way reverse works isn’t common knowledge for most people, so a little assistance and a little patience goes a long way.
Another lesson I learned is that reverse mortgages create a softer landing. This is something I already knew, but my personal experience really drove this idea home. Not only did their reverse mortgage help my parents during retirement, but it also helped my dad financially when my mom passed away.
Additionally, the relationship with the loan servicer after both my parents passed away did not create a huge burden on our family. Reverse mortgages allow you time to settle affairs after a homeowner passes away – it’s not like a traditional “forward” mortgage where a mortgage payment is due soon and, if not paid, late payment fees can start adding up.
Not to mention, the forward mortgage loan servicer starts to call your parents’ phone number looking to reach the borrower for a payment. None of those pressures exists with a reverse mortgage.
Settling the loan
As someone with loved ones who had a reverse mortgage, while you do have time after someone passes away, you still need to be mindful that the loan needs to be settled. Staying in touch with the servicer is recommended. Keep in mind that the estate has the option to sell or refinance the loan, the same as any borrower would with a traditional forward mortgage.
So much of these were things I already knew about reverse mortgages, but they came to life for me in a new way by helping my own family. After seeing it firsthand, I still strongly believe that reverse mortgages can be a great financial tool as part of an overall financial planning strategy.
This column does not necessarily reflect the opinion of Reverse Mortgage Daily and its owners.
To contact the author of this story: George Morales at [email protected]
To contact the editor responsible for this story: Chris Clow at [email protected]
Seniors who have employed some kind of home-based health care service have a higher acceptance and adoption of home-based hospice services, which can provide personalized support for end-of-life care, according to a study by Rutgers University’s School of Nursing. The findings were first reported by Hospice News.
Published in the Journal of Palliative Medicine, researchers found that the observed outcomes could stem from the identification of health issues that may complicate end-of-life care prior to engaging in it, making it easier for seniors to age in place in their own homes.
“Among all Medicare decedents in 2019, nearly half used home health care in their last three years of life, with close to 30% starting before their final year,” the study stated. “We found a strong association between home health care and hospice use at the end-of-life, and the effects were stronger in those without a diagnosis of dementia compared with those with dementia.”
Home health care providers, the study found, “identify terminal signs and support patients with chronic conditions, impacting decisions about end-of-life care.” But financial incentives also have the ability to impact the amount of hospice referrals, which could be of concern.
“Although our findings indicate that earlier home health care can lead to longer hospice care, especially in dementia patients, the potential for financial motivations in end-of-life care transitions raise concerns,” the researchers said.
But for those who are interested in aging in place — which by most accounts includes a majority of seniors — this correlation could represent ways in which remaining at home rather than going to a dedicated care facility might have benefits.
“The observed association between the use of home healthcare and hospice services underscores the importance of continuity of care, suggesting that home health care can facilitate aging in place and reduce the need for burdensome care transitions,” the researchers said. “It also points to the need for further research on how home health and hospice agency ownership affects referral patterns and end-of-life care utilization.”
The report primarily used data from Medicare recipients who died in 2019, assessing the circumstances of their deaths and whether or not they employed home-based care and hospice services.
Aging in place is a stated preference for a majority of older Americans, according to many dedicated surveys on the topic. Other recent data suggests that home-based health care is a leading outcome for older Americans.
Earlier this month, the Administration for Community Living (ACL) — a division of the U.S. Department of Health and Human Services (HHS) — announced the publication of a final rule that will update regulations for implementing programs under the Older Americans Act (OAA). One of the intentions of the rule is to better support the desires of older Americans to age in place in their own homes, ACL said.
I have partnered with WizeFi on this WizeFi Review. All opinions are 100% my own. I am excited to tell you about a new money tool that I recently started using. Are you looking for a money management tool that will help you budget, save hundreds of dollars each month, and accelerate your path to…
I have partnered with WizeFi on this WizeFi Review. All opinions are 100% my own.
I am excited to tell you about a new money tool that I recently started using.
Are you looking for a money management tool that will help you budget, save hundreds of dollars each month, and accelerate your path to financial independence?
If so, then I recommend checking out WizeFi. This money management software can be used from your phone or computer, and will give you all the tools that you need to take control of your finances.
Understanding money can be tricky, especially when you’re working towards long-term financial freedom. WizeFi helps you optimize your money to reduce waste and put your money where it’s most effective at accelerating financial freedom. It’s made for people who are serious about financial freedom.
Please click here to try out WizeFi for free for 30 days.
WizeFi right now is hosting a free 30-Day Financial Independence Challenge so that you can have a clear plan for reaching financial independence and retirement. You can sign up for WizeFi and the free 30-Day FI Challenge by clicking here.
WizeFi Review
Below is my WizeFi review. I will be talking about why it was started, the different ways this tool can help you, the cost, and answer some common questions.
What is WizeFi?
WizeFi is a helpful money tool for your computer or phone that helps you reach financial freedom. It’s like having your own money coach, helping you to make better decisions with your finances.
Here’s what WizeFi does:
WizeFi helps you manage and eliminate debt, quickly! WizeFi will sort your debt in an efficient pay-off order to save you money and pay off your debt quickly. Plus, the 30-day challenge will give you tips to accelerate your debt freedom journey.
WizeFi tells you your financial independence date. Learn where you’re headed now if you change nothing with your finances, and then learn what you can do to reach retirement sooner.
WizeFi finds hidden spending habits that might be getting in the way of your financial goals. For example, it will help you find out about everyday habits that you didn’t know could postpone your retirement by 5 years.
WizeFi makes plans just for you, not using generic templates that fit everyone.
WizeFi helps you make smart choices by providing the ability to create “what if” scenarios, which it calls “drafts” to test financial choices before you actually make them. This can help avoid costly mistakes like major purchases that could delay your financial freedom date by years. Or, discover opportunities for applying bonus money (like tax returns) where they can have the biggest impact on your financial goals.
WizeFi keeps an eye on your progress and motivates you by showing visible results. For example, understanding how little changes can change your future net worth.
WizeFi makes money less confusing and boosts confidence, reducing the stress about finances.
WizeFi helps you learn money skills, making you less reliant on others and more confident in managing your own finances.
As soon as you start using WizeFi, you’ll notice it’s not just about tracking expenses. The software is built around the concept of empowering you to develop money habits that could potentially halve the time it takes to reach your financial goals, such as early retirement or financial independence.
I’ve signed up for WizeFi, and I really like how easy the platform is to use. There are no ads and they aren’t trying to sell anything else that is extra, so you don’t have anything else cluttering this tool when you are trying to use it. It is straight to the point.
Why WizeFi was started
WizeFi was started in 2017 by Sean Allen, a financial expert and 30-year veteran of the financial industry. He was noticing that clients were failing with their finances, even though they were making enough money for early retirement.
He learned that there were two main causes of this:
A lack of money skills and
Not understanding the future impact of current choices (such as spending).
He then realized that there was a need for a change in the way that people approach money management so that they can pay off their debt and reach financial independence.
To find a solution to these challenges, he created WizeFi, starting as a program and later becoming an app. It focuses on making the most of every dollar you earn. WizeFi is all about helping you manage and eliminate debts and expenses that don’t benefit you financially.
The app aims to reach millions with its easy (yet effective) approach, speeding up the path to financial independence and giving people the ability to create a lasting system for building wealth.
How WizeFi Is Helpful
If you’re finding it hard to figure out why your money goals feel distant, WizeFi is the tool that can show you the patterns and choices that might be causing the challenge. Instead of being confused by a bunch of numbers, you’ll be able to see exactly where your money goes each month.
WizeFi helps you create a budget that fits your personal financial situation, and your financial plan is customized to you, making it more likely that you’ll stick to it and see real results.
Here are some ways that WizeFi can help you:
Discover your financial independence date. Learn where you’re headed now if you change nothing with your finances, and then learn what you can do to accelerate your FI date.
Find leaks in your spending habits: WizeFi will show you your spending all month long and compare it to your planned spending. This can be very eye-opening and help you discover spending habits you can change
Develop wealth-building habits: Speaking of habits, WizeFi is all about helping you develop money skills that lead to healthy financial habits. For example, when you subscribe, WizeFi starts you off with a 30-day challenge that can help replace bad habits with good habits. Try it for yourself.
WizeFi helps with three main money skills: Money Organizing, Money Planning, and Money Monitoring.
Money Organizing
WizeFi will sync with your financial accounts and organize your money into categories, and then it will provide a guideline spending amount for each category. See how your spending compares to the guideline.
Money Planning
WizeFi goes beyond just organizing your money; it also gives you a guideline so that you can know how to best use your money. It makes a personalized plan that matches your specific goals and financial situation, encouraging a proactive approach to your financial future.
WizeFi includes a process where you can go through each area of your finances and you can see how cutting back on certain expenses can increase money to be used towards accelerating your financial independence.
So, I could see how cutting back on dining out would give me more “financial independence dollars (FID) which WizeFi will then show me the best place to put those dollars in the 4-step plan. I can use WizeFi to plan the perfect budget that frees up FI-dollars.
Then, I can use WizeFi to determine the best use of those dollars—pay off debt, add to 401(k), or pay off a mortgage early – no more guessing. WizeFi will reveal which choices accelerate financial freedom and which delay it.
Money Monitoring
WizeFi allows you to monitor your money, such as your budget, spending, income, debt payoff progress, and net worth. Knowing these numbers and being able to monitor them can help motivate you to make changes for the better.
Money monitoring is known to help people think differently about their money. It keeps people constantly aware of where their money is going compared to where it should be going.
WizeFi provides monthly reporting to monitor your financial trends like is your net worth growing and your debt shrinking, and is your budget balanced like you want it to be.
WizeFi also provides real-time monitoring with progress meters so you can watch your money every day to make sure you stay on track. Both of these are key to empowering you to be a great manager of your money without having to become a financial analyst. WizeFI keeps it simple.
How To Get Started With WizeFi
WizeFi allows you to better manage your finances from both a computer/laptop and from your phone. They also have a 30-day email challenge that teaches you how to save money, make money, and develop money skills.
As you check out what WizeFi can do, you’ll see it provides various tools to improve how you handle money. With easy-to-use features and a clear plan, WizeFi is designed to guide you toward financial freedom in a better and more effective way.
Here’s how you can get started:
Sign up for the 30-day free trial of WizeFi and get enrolled in the 30-day challenge
Enter your goals, such as your emergency fund target, general savings target, and your desired monthly income at retirement.
Enter your salary (net monthly income after taxes), any side hustle income, investing income, and more.
Enter and connect your financial accounts, such as bank, car loan, mortgage, retirement accounts, and more.
After you enter the information above, you will see your financial freedom projections. This will show you the exact date that WizeFi thinks you will be able to retire if you continue the way that you are with your financial situation. You will also see WizeFi’s built-in wealth potential guideline and the exact date you will be debt-free.
WizeFi 30-Day Financial Independence Challenge
As you noticed above, I think the best way to get started with WizeFi is to sign up and take their 30-Day Financial Independence Challenge.
WizeFi just launched this challenge and it’s a free, daily guide filled with steps to help you grow your money smarts and sprint toward financial independence faster than you might think possible. You’ll receive an email every day with new actions to take that can refine your spending and saving habits.
Here are a few highlights of the challenge:
Reduce expenses – You’ll see how small changes in daily spending can create big savings over time. You’ll actually learn 200 different strategies to stop wasting money!
Debt mastery – Get tips on handling debts that stand in your way.
Build wealth – Learn about strategies that can increase your income.
On Day 1, you start crafting your very own FI plan. This sets the foundation. By Day 2, you’re diving into ways to spend less on food, and by Day 3, it’s all about saving on transportation. Throughout the challenge, you’ll learn to cut costs across many different spending categories without sacrificing the fun in your life.
Day 9 shows you powerful wealth-building strategies. As you approach Day 17, you’ll see the five stages of financial independence.
Jumping into Day 20, get creative with 50 side hustle ideas to boost your income. Later on, Day 26 focuses on investing tactics designed to speed you along to FI.
This is a free challenge that is sent straight to your email. I am signed up for this challenge and it is full of actionable tips that are actually helpful (and not just fluff or generic tips).
You can sign up for the free 30-Day FI Challenge by clicking here.
WizeFi Cost
So, after reading all of the above, you’re probably wondering “How much does WizeFi cost?”
Free trial
You get to use WizeFi risk-free for the first 30 days. During this period, you have complete access to all features, and you can cancel anytime if you decide it’s not for you.
Monthly cost
The service is available for $8.99 per month. This subscription is designed to pay off by helping you potentially grow your net worth by tens of thousands (or even hundreds of thousands of dollars) and put you on a faster track to financial independence.
Why isn’t there a free plan?
WizeFi is dedicated to providing a complete set of money tools and tailored advice for your financial growth. Unlike some free tools that might restrict your potential, your paid subscription makes sure that the services are high-quality.
Plus, WizeFi stays focused on your financial well-being, avoiding promotions of external products that might conflict with your financial goals. This is something that I really like about WizeFi – they aren’t trying to sell you anything else – you are getting a helpful money tool without any ads.
WizeFi Security – Is WizeFi Safe?
When thinking about using WizeFi for managing your finances, security is important.
WizeFi makes sure that your information is safe with protective measures similar to those used by banks.
In a digital world where safety is important, you can relax knowing that WizeFi doesn’t keep your account numbers or personal details within their app. What you see are the important elements—your budget and balances. It’s like having a clear view of your financial landscape without any doors open to the private account information you don’t want to share, like account numbers or other personal information, making the platform safer for you.
Think of WizeFi as a one-way mirror. You have the full picture of your finances at a glance, yet there’s no path for anyone to reach in and move things around.
Frequently Asked Questions
When thinking about using a financial planning tool like WizeFi, you probably have questions about what it offers and whether it’s the right fit for you. Here are some of the common questions answered to help you decide.
Can I try out WizeFi for free?
Yes, you can start with WizeFi for free. They have a 30-day trial period for you to explore the full range of features before you commit to a subscription.
Please click here to try out WizeFi for free for 30 days.
How can WizeFi help me reach early retirement sooner?
WizeFi is designed to guide you in creating a personalized financial plan. By helping you customize the right budget plan, and track your spending against that plan, you’ll easily identify unnecessary expenses you can cut, which can help you better manage debt and increase your savings rate, which can help you reach your financial goals faster.
Is WizeFi worth using?
Yes, WizeFi is worth it if you’re serious about taking control of your finances and reaching financial independence or early retirement.
Does WizeFi have an affiliate program?
Yes, WizeFi has an affiliate program where you can earn 20% of the monthly subscription (so 20% of $8.99). Their hope is that people will use WizeFi for a month and dial in their own personal finances (craft a new plan that makes them feel empowered to manage their money for financial freedom). Then, they’ll share what they’ve learned with their audience.
WizeFi Review – Summary
I hope you enjoyed my WizeFi review.
If you are committed to improving your personal finances and want to reach early retirement or financial independence, I think that WizeFi is great to sign up for.
WizeFi stands out from other money tools because they focus on developing money skills, and not just giving you information, because the WizeFi team knows that money skills can make a difference for a lifetime. Plus, there are no ads and they don’t sell your information.
Their goal is to empower a person to master their money, speed up financial independence, and live their best, most meaningful life.
If that is you, then this is the money tool that I recommend checking out.
Please click here to try out WizeFi for free for 30 days.
Middle-income Americans who are 75 and older are at serious risk of a retirement crisis, according to a new research brief from the National Opinion Research Center (NORC) at the University of Chicago.
“Our cumulative research has projected an impending crisis without a clear policy solution: a majority of middle-income older adults will be unlikely to afford needed care and housing in the next decade, potentially challenging their ability to age with dignity, choice, and independence,” the researchers stated.
Financial disparities are also varied across a series of racial and ethnic groups, the researchers found. Cohort members who are also people of color typically face larger disparities than their white counterparts. In 2020, people of color represented about 12% of the middle-income older adult population in the U.S., a figure that is expected to more than double to 25% by 2035.
“The largest shift in composition is among Hispanics, who will comprise nearly 11 percent of the middle-income group in 2035 — nearly a three-fold increase from 2020,” the researchers found.
Compounding the concerns about housing this population could face are the kinds of assets that older, middle-income people of color typically have.
“Black and Hispanic older adults tend to hold fewer liquid assets than white older adults,” the brief states. “Holding fewer liquid assets makes it more difficult to access the housing and care options that align with their preferences.”
For this analysis, researchers examined the asset portfolios of middle-income older adults. They found that those “who do not qualify for Medicaid often must rely on other sources of income, such as pensions or retirement accounts, to afford the care and housing options they need or want.”
Having more liquid assets could make housing and health care easier and more affordable for them, but that’s not necessarily an easy transition for many to make — especially among people of color, the researchers found.
“33 percent of Black and Hispanic older adults’ asset portfolios comprise transportation items like a personal vehicle,” the brief said. “Liquidizing a vehicle is both inconvenient and impractical as it eliminates a source of independence in a society increasingly dependent on private vehicle access.”
The Administration for Community Living (ACL), a division of the U.S. Department of Health and Human Services (HHS), announced this week the publication of a final rule that will update regulations for implementing programs under the Older Americans Act (OAA). One of the intentions of the rule is to better support the desires of older Americans to age in place in their own homes, ACL said.
Passed by Congress in 1965, OAA established comprehensive services for older Americans by creating a national aging network at the state and federal levels. First signed into law by President Lyndon Johnson, OAA was reauthorized by Congress in 2016 and 2020, and it is currently in effect through the end of 2024.
“The first substantial update to most OAA program regulations since 1988, the rule aligns regulations to the current statute, addresses issues that have emerged since the last update and clarifies a number of requirements,” ACL said in an announcement of the rule.
ACL oversees a national aging network designed to deliver OAA services, and this new rule is aimed at better supporting the network by improving program implementation.
“[ACL has] the ultimate goal of ensuring that the nation’s growing population of older adults can continue to receive the services and supports they need to live – and thrive – in their own homes and communities,” the announcement stated.
The announcement outlined 11 key provisions in the update, including clarification of requirements for state and area plans on aging, as well as details about requirements for coordination among state, local and tribal programs. Consistency of definitions between these programs has been improved, HHS said, and “provisions for meeting OAA requirements for prioritizing people with the greatest social and economic needs” have also been “strengthened.”
The new final rule also specifies “the broad range of people who can receive services, how funds can be used, fiscal requirements, and other requirements that apply across programs.” It also “clarifies required state and local agency policies and procedures” including the establishment of “expectations regarding conflicts of interest.”
The final rule added guidance for state-based agencies, as well as the National Family Caregiver Support Program and the Native American Caregiver Support Program, both of which were established since the last update.
ACL updated provisions for emergency preparedness and response, taking lessons from issues discovered during the COVID-19 pandemic.
“Older Americans should be able to live independently and age with dignity,” HHS Secretary Xavier Becerra said in the announcement. “The Biden-Harris Administration is committed to expanding access to health care, nutrition services, caregiving, and opportunities to age in place for all older Americans. This update to the Older Americans Act regulations strengthens the system of supports that help older people live independently and age with dignity.”
Alison Barkoff, who leads ACL, said that the new rule stems from data that indicates an overwhelming desire among older Americans to age in place.
“For many, [aging in place] is possible because of the programs and services provided through the Older Americans Act – such as rides to medical appointments, nutritious meals, in-home services and support to family caregivers,” Barkoff said. “The updated regulations strengthen the stability and sustainability of these programs, and we are looking forward to working with our partners in the aging network to implement them.”
Late last year, the U.S. Department of Housing and Urban Development (HUD) announced its own $40 million investment to support aging-in-place services. The investment is designed to “expand the supply of service coordinators who support seniors and persons with disabilities” who live in affordable multifamily homes, HUD said.
Retired couples who are Medicare beneficiaries could need as much as $413,000 saved to cover medical expenses in the latter stages of life, an increase over the previous year’s estimate of $383,000. This is according to new findings from the Employee Benefit Research Institute (EBRI).
The figure is the “predicted savings target for Medicare beneficiaries to cover premiums, deductibles, and prescription drugs in retirement,” EBRI explained.
The estimates break down differently for single men, women and couples who are part of Medicare supplemental insurance plans, and the figures aim to offer retirees “a 90% chance of meeting their health care spending needs in retirement.”
For single men, the savings figure is $184,000. For single women, the estimated figure is $217,000, while couples in supplemental insurance plans would need an estimated $351,000.
“Health care costs in retirement can be considerable and may not necessarily be a salient issue for workers,” said Jake Spiegel, research associate for health and wealth benefits Research at EBRI. “To project how much Medicare beneficiaries may need to save to have a reasonable chance of meeting their health care spending requirements in retirement, EBRI built a simulation model allowing for uncertainty due to mortality and rates of return on assets in retirement.”
The model takes recent changes to Medicare Part D into account, enacted as part of the 2022 Inflation Reduction Act passed by Congress and signed into law by President Joe Biden.
The EBRI model “tests varying assumptions about Medicare Advantage and [supplemental insurance] plans that Medicare beneficiaries may purchase,” Spiegel explained. “The output of this updated simulation model is the basis of this new report.”
The $413,000 estimate is an “extreme case,” the results explain. A couple would need to have “particularly high prescription drug expenditures” for that savings figure to adequately have a 90% chance of meeting health care spending needs during retirement.
The study also found that those enrolled in Medicare Advantage plans — private plans that “provide all of your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage” and that are separate from supplemental plans — have “generally lower savings targets” than those not enrolled in such plans.
“The results from EBRI’s projection model indicate that basic health care costs incurred by Medicare beneficiaries are high,” Spiegel added. “While the savings targets tend to be lower for Medicare Advantage enrollees relative to Medigap enrollees, there are important limitations to take into account.”
A recent survey found that nearly 25% of adults have no retirement plan besides Social Security, a benefit program that accounts for many older Americans’ primary source of cash flow in retirement. Social Security benefits rose in 2024 by 3.4%, but seniors continue to express concern over their ability to make ends meet.
For seniors who have retired, taking on additional debt that requires a monthly payment while being on a fixed income could have ramifications on quality of retirement, and it should be considered in concert with all the facts about how it will impact a senior’s financial situation.
This is according to experts who spoke to personal finance website Bankrate about the concept of taking on a new mortgage in retirement. Certain things beyond current cash flow should also be taken into consideration, including data that suggests seniors face higher rejection rates on traditional mortgage applications, as well as alternative products such as reverse mortgages.
Age information is collected at the time of origination, but only for Home Mortgage Disclosure Act (HMDA) purposes. Seniors, even those of advanced age, are legally required to face the same qualification requirements as any other mortgage applicants.
“I once did a 30-year mortgage for a 97-year-old woman,” Michael Becker, branch manager at Sierra Pacific Mortgage in Lutherville, Maryland, told Bankrate. “She was lucid, understood what she was doing and just wanted to help out a family member [by taking] some cash out of her home, and had the income to qualify and the equity in the home — she owned it free and clear. So she was approved.”
An analyst for Bankrate describes some challenges that could be unique to older mortgage borrowers if they take on a new, debt-based financial instrument.
“Even if one owns a property with no further mortgage payments due, property taxes and upkeep will be a consideration,” Bankrate senior economic analyst Mark Hamrick said. “As with people of all ages, having a budget, limiting expenses and accurately accounting for income expectations are key.”
Using retirement savings to pay down mortgage debt could have a notable impact on a senior’s retirement resources, Bankrate noted, but there are options specifically designed for seniors seeking mortgage financing.
These include a reverse mortgage, which also requires the borrower to pay property taxes and insurance, but which — based on the home’s value, interest rates and other factors — offers payment options to the borrower instead of the other way around. Reverse mortgage industry advocates say that this helps insulate retirement resources from traditional mortgage payments.
Unlike a Home Equity Conversion Mortgage (HECM), forward mortgages were not designed with seniors in mind, according to Martin Andelman, reverse mortgage trainer and speaker with HighTechLending in Orange, California.
“It’s also worth mentioning that [in terms of] 30-year mortgages, I promise you, no one ever sat around and talked about 30-year mortgages thinking they’d be perfect for 70- and 80-year-olds,” Andelman said in a 2019 episode of The RMD Podcast.
“30-year mortgages were never meant to be for them. And now, I bump into people all the time who could be 72 years old, just refinanced two years ago, and now have only 28 years to go. What could go wrong?”
For seniors who have retired, taking on additional debt that requires a monthly payment while being on a fixed income could have ramifications on quality of retirement, and it should be considered in concert with all the facts about how it will impact a senior’s financial situation.
This is according to experts who spoke to personal finance website Bankrate about the concept of taking on a new mortgage in retirement. Certain things beyond current cash flow should also be taken into consideration, including data that suggests seniors face higher rejection rates on traditional mortgage applications, as well as alternative products such as reverse mortgages.
Age information is collected at the time of origination, but only for Home Mortgage Disclosure Act (HMDA) purposes. Seniors, even those of advanced age, are legally required to face the same qualification requirements as any other mortgage applicants.
“I once did a 30-year mortgage for a 97-year-old woman,” Michael Becker, branch manager at Sierra Pacific Mortgage in Lutherville, Maryland, told Bankrate. “She was lucid, understood what she was doing and just wanted to help out a family member [by taking] some cash out of her home, and had the income to qualify and the equity in the home — she owned it free and clear. So she was approved.”
An analyst for Bankrate describes some challenges that could be unique to older mortgage borrowers if they take on a new, debt-based financial instrument.
“Even if one owns a property with no further mortgage payments due, property taxes and upkeep will be a consideration,” Bankrate senior economic analyst Mark Hamrick said. “As with people of all ages, having a budget, limiting expenses and accurately accounting for income expectations are key.”
Using retirement savings to pay down mortgage debt could have a notable impact on a senior’s retirement resources, Bankrate noted, but there are options specifically designed for seniors seeking mortgage financing.
These include a reverse mortgage, which also requires the borrower to pay property taxes and insurance, but which — based on the home’s value, interest rates and other factors — offers payment options to the borrower instead of the other way around. Reverse mortgage industry advocates say that this helps insulate retirement resources from traditional mortgage payments.
Unlike a Home Equity Conversion Mortgage (HECM), forward mortgages were not designed with seniors in mind, according to Martin Andelman, reverse mortgage trainer and speaker with HighTechLending in Orange, California.
“It’s also worth mentioning that [in terms of] 30-year mortgages, I promise you, no one ever sat around and talked about 30-year mortgages thinking they’d be perfect for 70- and 80-year-olds,” Andelman said in a 2019 episode of The RMD Podcast.
“30-year mortgages were never meant to be for them. And now, I bump into people all the time who could be 72 years old, just refinanced two years ago, and now have only 28 years to go. What could go wrong?”
Data from research organizations and aging advocacy groups is clear: More older Americans want to age in place in their own homes, as opposed to living in dedicated care facilities.
To get a better grasp on this preference, Chicago-based National Public Radio (NPR) affiliate station WBEZ recently featured a dedicated aging-in-place segment. WBEZ spoke with experts and community members about why more older Americans are opting to remain in their homes as they grow older.
The preference to age in place is rooted in emotion and familiarity that’s likely to be lost by moving to another environment, according to Margaret LaRaviere, deputy commissioner of senior services with the Chicago Department of Family Support Services.
“Studies have found and supported that if you ask the senior where they would like to be, they want to age within [their homes and] communities,” she said. “[They want to be among] neighbors that they’ve known for years [and in] areas that are familiar to them. When you look at aging outside the home in a senior retirement facility, it can range anywhere from $4,000 to $12,000 [per month].”
These costs only increase if, for example, a resident of a senior housing facility needs memory care support to deal with cognitive challenges, like dementia or Alzheimer’s disease, LaRaviere said. This pushes dedicated care facilities out of financial reach for many American seniors and their families, she added.
Mary Mitchell, a columnist and the director of culture and community engagement for the Chicago Sun-Times, recently wrote a column about aging-in-place dynamics in the Chicago community. She described her own aging-in-place experience in a recent column as well as on the radio segment.
“I made the move because [a] three-story house was too much for me to handle,” she said. “[It was] a lot of house and a lot of stairs to climb from basement to attic, so that’s one reason I just needed to make a change. But the thing that was also on my mind when I moved out of that house was that this house is perfect for a young family.”
This made her believe that it was time to “move on,” but the journey was a very emotional one for her.
“I packed up knowing that I was putting stuff in storage, I was giving stuff away [and] I was moving into a smaller space,” she said. “And it was very important for me to really embrace this as my forever place, and I have no intention of moving from there to another place.”
But data can only go so far when taking stock of seniors’ preferences, and Mitchell explained the emotional dynamics of such a choice more deeply.
“I was sad; it was like a part of me,” she said. “This was my home for 30 years. I knew every nook and cranny and every window, [and it] was a lovely community. I knew my neighbors, I knew the people who work at the stores and all of that. It’s familiarity, and I think as I get older, I crave familiar places and familiar spaces.”
The stock market is hitting new highs. What should we make of this?
This week, the S&P 500 reached yet another record high — marking its fourth consecutive day reaching a new all-time high.
Last Friday (the first of these four consecutive trading days) marked the first time in two years that the S&P 500 finished at an all-time high.
Here’s an 11-minute video recapping what happened:
After two years of not achieving any new highs, the S&P 500 is now breaking records daily.
How do we interpret this? Here are a few things to keep in mind:
(1) The high is comprehensive.
The S&P 500 — which tracks 503 stocks — represents about 80 percent of the overall market.
It’s a more comprehensive indicator of the overall market than the Dow Jones, which tracks only 30 large companies. The Dow took a slight dip today, but both the Dow and the NASDAQ hit new highs in December.
The Dow is an excellent indicator of how large companies are faring. But the S&P 500, by virtue of tracking a much bigger basket, is a better reflection of how the overall market, including small and medium sized companies, are also performing.
(2) The tech sector dominates the all-time highs.
Tech companies make up the largest chunk of the S&P 500. Here’s a chart of the top ten companies by weight for SPY, an exchange-traded fund that tracks the S&P 500:
Source: slickcharts
The top ten companies in SPY are nearly all in the tech sector. This stands in contrast to the wider, more expansive range of sectors that comprise the top ten Dow Jones companies by weight:
Translation: while the overall market (including small and mid size companies) is doing well, the bulk of the gains are still being driven by tech.
The same small group of megacap companies — the “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla) — that drove much of last year’s growth continues to lead the way, fueled by hopes of an artificial intelligence boom.
But what’s interesting is that the equal-weighted S&P 500, in which every company within the index gets the same weighting, is only slightly lagging the standard S&P 500. Yes, equal-weighted is behind, but not by much. Translation: even without the oversized influence of the Magnificent Seven, the index is running strong.
The market has also priced in the expectation that the Federal Reserve will lower interest rates this year, which leads to the next point …
(3) The Fed will send new signals at the end of January.
The next Fed meeting is Jan 30-31, at which point we’ll know whether the Fed is ready to start cutting interest rates yet.
The Fed held rates steady during their last two meetings, held in September and November 2023.
They’re widely expected to cut rates in 2024, but the debate that economists and market-watchers are holding is when? — could it be as early as next week? (Unlikely, but possible.) Or will it happen during one of their following meetings on March 19-20 and April 30-May 1st?
Many analysts expect that the Fed will hold rates steady this winter and begin cutting in the spring or summer, but the substantial improvement in inflation data has some people feeling optimistic that these cuts might come sooner than later.
The Fed rate cuts are expected to unleash pent-up demand for everything from cars to houses and make capital more accessible for companies.
Homebuying, in particular, is expected to rise as interest rates drop, leading to a projected minor climb in home prices this year. (Mortgage interest rates are at their lowest point since last May.)
Summary: Big Tech is fueling record-high market growth, inflation is under control, and the overall economy looks resilient.
The average person is starting to feel better about their wealth.
The U.S. Consumer Sentiment Index is at its highest point since July 2021. As the name implies, this index measures how confident and optimistic people feel about their finances.
This survey, conducted by the University of Michigan, shows huge gains in households feeling more confident that inflation is behind us, jobs are strong, and income can keep up with expenses.
The index climbed a cumulative 29 percent over the last two months. That’s the biggest two-month leap since 1991.
That said, we’re still no where close to our 2018-2019 confidence levels.
What’s the takeaway from all of this?
Economic data is strong. Markets are on a tear. Consumer sentiment is improving. The year ahead has plenty of cause for optimism.
Blackstone CEO Steve Schwarzman, at the World Economic Forum in Davos, mentioned that he thinks “animal spirits” — the role emotions play in the markets — will be strong this year.
Given how much is riding on consumer confidence in this (almost) post-inflationary world, that’s particularly apt.
For more detail, watch the latest YouTube breakdown.