Converting Housing Wealth Of Retirees Into Spendable Funds

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By Jack Guttentag (2022, April 08).

Retirees who own a valuable home but little else are a large but underserved minority who worry about running out of money before they die. Their major need is for an effective way to convert their housing wealth into spendable funds.

The two potential approaches toward meeting this need are debt-based and equity-based. The first has the retiree borrowing funds, with the house serving as collateral to guarantee repayment. The second approach provides funds for an equity investment that includes a share of the future growth in the value of the home.

This article compares versions of both. The HECM reverse mortgage program is debt-based, and Federally-sponsored and regulated. EquiFi Equity Access EFI tm is an emerging equity-based program that is privately owned by a Public Benefit Corporation. Unlike other equity-based firms, it is geared broadly toward retirees rather than home buyers and has no mandatory termination date.

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