Older Millennials will not be eligible for a Home Equity Conversion Mortgage (HECM) until 2043, but housing issues facing the cohort could cause many of this generation to become more ” rich in house and poor in money ”. than those who preceded it. That’s what emerges from a survey released this month by alternative home equity operating company Hometap.
Millennials are also more likely to have a much lower understanding of their home’s equity position, according to the study.
“Millennials spend the highest percentage of their monthly income on homeownership fees compared to other generations and are at the greatest risk of going money rich and money poor,” the company said in a results announcement. of the investigation. “With home values remaining high nationally, Millennials are also the least likely to know or calculate their home equity. “
In a survey of 1,000 US-based homeowners, 47% of those polled saw their finances negatively affected by the COVID-19 coronavirus pandemic, while 77% carry some form of debt or liability. Additionally, millennials (83%) are more likely to take on debt than their older baby boomer counterparts (72%).
While homeowners are generally not particularly well aware of the options their home equity might offer in retirement, Millennials also tend to lag behind their seniors when it comes to understanding their options in this area. according to the study.
“Many homeowners do not realize that their home is a source of workable home equity and therefore miss out on opportunities to capitalize on their assets, meet pressing priorities and achieve their financial goals,” according to the findings of the ‘investigation.
While the reverse mortgage industry most often serves members of the baby boomer generation, recent product developments have broken down the age barrier. Reverse Mortgage Funding (RMF) and Finance of America Reverse (FAR) introduced new eligibility options to their proprietary reverse mortgage products earlier this year that in some states will allow borrowers as young as 55 to ‘get a reverse mortgage.
For millennials, that means older members of the generation will start qualifying for some sort of reverse mortgage in some areas as early as 15 years from now, in 2036, assuming such options continue to be available. .
“Hometap surveyed 1,000 homeowners in the United States aged 25 to 75 through Ask Your Target Market (AYTM) in August 2021,” the company said of its methodology.
Read the results of the study on Hometap.