Sun-setter’s (positive spin for senior citizens) are experiencing the new coined phrase, ageism and continue to dominate the reverse mortgage market. New trends in the reverse mortgage industry are emerging. A new “hybrid” model utilizing reverse mortgages can improve a sun setter’s monthly cash flow; reducing their energy consumption by greening up.
While many may believe that reverse mortgages are not economically solvent and possibly exploit the senior community (this writer’s initial preconception), cashing out to improve property efficiency and incorporating high-performance measures (i.e., improvements to the building envelope, adding renewable technology) can be a great economic plus.
Reverse mortgages allow the owner to cash out, and they are not required to make mortgage payments if they meet the following qualifying criteria:
- Must be 62 years of age
- Own a home with equity; any mortgage or property liens must be paid at closing
- Loan amount calculations are based on home value, age and how the current mortgage amount
- At least one borrower or spouse must continue to occupy the home for the life of the loan; if deceased or relocating to retirement facility, spouses and/or their heirs have 6 months to sell the property or restructure the debt and pay off the loan. (* Any additional equity and unused proceeds realized beyond the initial disclosed property value will go to the heir or spouse.)
The homeowner receives payments with flexible terms:
- Credit line for emergencies
- Monthly distribution payments
- Lump sum distribution
- Any combination of the above
The main advantage of the reverse mortgage loan is the cash flow potential it allows, as there are no monthly mortgage payments. Many people use the proceeds to pay off medical bills, credit card debt, or simply to supplement their fixed incomes. But when you can also use the loan proceeds to green up your property, you can realize even greater economic benefits, including security from rising utility and maintenance costs.
In many regions, utility costs are trending up, with expected increases as much as 30 percent over the next 5 years. For sun-setters this can be a challenge due to their fixed income and cash flow constraints. In addition, research and feedback continues to be positive for people greening up. Reports of better comfort, health benefits (cleaner air quality) are pluses that add value to their quality of life.
For more information on greening up with reverse mortgages, contact Green Energy Money.
According to Patrick Roden, creator of AgingInPlace.com, another significant market trend for sun setter’s is the Aging in Place model. Their recent blog titled, Aging in Place, The Idea Series, Positive Aging, states, most adults would prefer to age in place—that is, remain in their home of choice as long as possible. In fact, 90 percent of adults over the age of 65 report that they would prefer to stay in their current residence as they age. One-third of American households are home to one or more residents 60 years of age or older.
Technology can be an enabler for aging in place—there are four categories of technology that acts as an enabler—Communication and Engagement, Health and Wellness, Learning and Contribution, and Safety and Security. Caregiving technologies help those who care for older adults provide that care in the most effective way—and include new technologies for smart phones and tablets, as well as websites—such as Caring.com or AARP.org/Caregiving.
While many would agree with the terms, language and categories used in the Aging in Place Idea Series blog; there is an important component that isn’t being addressed. Dramatically reducing energy costs by improving the building envelope (saving energy) and generating renewable power (making as much energy as you use), can significantly improve the return on investment in less than 5-10 years (depending on the level of building performance upgrades). Security from rising interest costs, comfort and health can be achieved by investing in high-performance upgrades.
A GEM recent case study on a Reverse Mortgage gone green project, funded by Goldwater Bank, (FHA Reverse Mortgage), supports the concept that sun-setters benefit greatly with green investments. Proceeds are being allocated for property upgrades, i.e., adding a metal roof, upgraded insulation and solar power. Future value of utility bills bills or energy savings can represent an estimated $15k-$20k in disposable income for sun setters over 10 years.
Yet aging in place holds another possibility for community lifestyle choices. Many senior communities and living facilities are now hyper-focused on the essence of quality of life, wellness, and longevity aspects. Surveys have shown that most sun-setters believe community age diversity should also play an important role. As the population experiences ‘ageism’ and people live longer, quality of life that includes diverse human connectivity is becoming more crucial.
Adrienne Faulkner, Founder and CEO, Faulkner Design Group, serves the aging in place development market with innovative sustainable design solutions. Her philosophy emanates the new emerging sun-setting culture; we are removing barriers, standardizing methods and adhering to higher building standards (green and sustainable). We have a Universal Understanding of Global Design®. Our goal is to set the standard in creative thinking, innovation, and concern for the environment in a way that benefits and inspires people through the spaces we create. Everything we do needs to impact the lives of people in a positive way.
The emerging market toward sustainable, healthy, diverse community lifestyles is evolving slowly and more real estate developers are now beginning to adapt a diverse ‘cradle to grave’ (graduated living system) approach, as well as incorporating environmental design. Baby boomers simply don’t want to be holed away by themselves waiting to die. They want to live longer, healthier existences and stay connected with their communities. This lifestyle approach creates less burden on society and governments as the aging population is more contributory, productive, happy, and healthy. For more information on Graduated Living Systems® and sustainable community finance, contact info@GreenEnergy.Money