Innovative reverse mortgage product provides flexible financing solution, gives homeowners access to cash while preserving their low-interest-rate first mortgage
February 01, 2023 07:00 AM Eastern Standard Time–SAN DIEGO–(BUSINESS WIRE)–Millions of older Americans have, in recent years, secured or refinanced their mortgages into record-low interest rates compared to today’s higher rates. Many of these homeowners are also seeking ways to access the equity from significant home-price appreciation to supplement their cash flow needs, pay off high-interest bills, or make upgrades to their homes. Recognizing this growing, largely unmet need for pre-retirees and retirees seeking flexibility, leading retirement mortgage solutions innovator Finance of America Reverse (“FAR”) today announced the launch of an enhanced version of HomeSafe Second.
HomeSafe Second is the only home equity product of its kind that gives older homeowners an alternative to a home equity loan, home equity line of credit, cash-out refinance, or a personal loan by enabling them to access their home equity without impacting their monthly budget or low-interest-rate first mortgages.
“More than 21 million homeowners aged 55 or older had a mortgage in 2021, according to data from the U.S. Census Bureau. We believe many of these homeowners could be potential HomeSafe Second customers,” said Kristen Sieffert, President of FAR. “With inflation, rising healthcare costs, and diminishing retirement accounts, older homeowners are facing a litany of challenges that are putting a strain on their finances. This game-changing product enables older homeowners to unlock the power of their home equity without impacting their household budget while they live in their home.”
HomeSafe Second is a fixed-rate, proprietary reverse loan that allows borrowers to tap their home equity via a second mortgage with no monthly payment requirement (other than required tax and insurance payments and their existing mortgage payments) and no change to the interest rate on their first mortgage. The enhanced version of HomeSafe Second now makes homeowners 55 and older* eligible for the loan. HomeSafe Second will initially be available in California, Colorado, Connecticut, Florida, South Carolina, and Texas, with the goal of expanding to more states in the coming years.
Sieffert added, “We’re excited to continue to grow the reverse market and help more customers use their home equity in strategic ways to realize the possibilities of retirement.”
The Consumer Benefits of HomeSafe Second
Home equity for seniors reached a record $11.81 trillion in the third quarter of 2022, according to research from the National Reverse Mortgage Lenders Association. For older homeowners, a HomeSafe Second loan might help them meet their financial and retirement goals.
HomeSafe Second loans may be used for any purpose except to pay off the first mortgage balance, and it can only be used behind a traditional forward mortgage. Loan proceeds are income tax-free and funds are distributed via a lump-sum payment at closing with a maximum loan amount of $4 million. The homeowner or their heirs will never owe more than the value of the home, as it is a non-recourse loan, and there is no minimum home value to qualify.
Potential loan uses include:
- Paying down high-interest credit card or medical debt;
- Investing in a vacation home, rental property, or business venture;
- Funding home improvement projects or renovations;
- Covering tax obligations or purchasing insurance policies or annuities.
Britany Luth, Senior Vice President of Business Optimization at FAR, said, “We remain focused on growing our potential customer base and introducing more homeowners to the benefits of home equity, and this exciting product will help us accomplish those goals. FAR is agile about responding to market conditions, and we’re proud to help even more homeowners thrive in their later years with this loan option.”
Additional information about HomeSafe Second, including full product details and loan terms, is available on the product section of the FAR website.
*HomeSafe Second customers in Texas must be 62 or older to qualify.
About Finance of America Reverse
As a retirement solutions company and part of the Finance of America Companies (NYSE: FOA) family of companies, Finance of America Reverse is committed to empowering people with the tools they need to achieve financial independence and get to work on retirement. Through its team of Licensed Loan Officers and network of professional and wholesale partners, Finance of America Reverse offers products and services designed to help older Americans include home equity in their retirement plans. The company is licensed nationally and is a proud member of the National Reverse Mortgage Lenders Association (NRMLA).