Advisors and homeowners do not know enough about how to leverage their home’s equity when they need money, according to the National Council On Aging Services LLC.
Financial advisors and homeowners do not have a good understanding of the two main ways to use home equity, which are a home equity line of credit and a reverse mortgage, according to a study released Tuesday by the council.
“We need to do a better job of educating consumers about the products available and how best to use their homes as a strategic asset as they age,” says Jay Greenberg, CEO of the National Council on Aging Services, which is a subsidiary of the National Council on Aging.
Financing retirement is a major concern for a majority older Americans and most retirees or near retirees focus on accumulated assets such as savings, 401(k)s and annuities. They should also consider home equity as a source of money, the council says.
There is great disparity among financial advisors in the level of knowledge about and comfort with reverse mortgages, indicating a need to educate these key influencers about the home equity product, the study says. The study included 254 advisors, 1,002 investors age 60 to 75 and focus groups with 112 consumers.
When the two home equity products were described but not named, 58 percent of consumers and 43 percent of financial advisors preferred a reverse mortgage. When the products were named, 68 percent of consumers and 37 percent of financial advisors preferred a home equity line of credit. Consumers also said they were open to advice from a trusted source on how to use home equity to help fund retirement.