EquityAvail TM lowers monthly mortgage payments for ten years, at which time they are eliminated altogether; creates glidepath to retirement.
Innovative hybrid product, combines aspects of traditional and reverse mortgages to deliver a ‘new world of options’ for homeowners at or near retirement
For many Americans over the age of 60, the pathway to achieving financial security in retirement has become increasingly challenging. They are living longer and often have cashflow shortfalls and carry significant debt – including a traditional home mortgage. In fact, over the last three decades, the number of people over the age of 60 burdened by traditional mortgage debt has doubled to more than 40%i. With historically low interest rates, some homeowners will end up exploring a mortgage refinance in an effort to reduce monthly payments and potentially take “cash out” from their home equity. However, a traditional refi can spell trouble for borrowers over 60 who are charting their course to retirement.
- When one or more borrowers have reduced income due to retirement, they may not qualify under traditional loan guidelines due to high debt-to-income ratios.
- Those who do qualify can end up tethered to 30 more years of mortgage payments. If ability to make these mortgage payments is dependent upon continued full-time employment, this is not sustainable for borrowers hoping to retire.
- Even if the borrowers can qualify for a refinance today, and plan to work for the foreseeable future, an unexpected income loss—through disability, death of a partner or unrelated economic upheaval, like that encountered in 2020 with COVID-19—could leave the borrowers with no feasible option but to sell their home.
The upcoming launch of EquityAvail by leading retirement solutions innovator Finance of America Reverse LLC (“FAR”) is opening up a significant new set of options for homeowners. This product is the first-of-its-kind and will provide a needed option for a large segment of the population looking to improve cashflow and remain in their home for as long as they wish.