Inaugural “Home Equity Punch List” Survey Indicates Less Than Half of Baby Boomers Consider Home Equity in Long-Term Financial Planning

Findings Shine Light on Knowledge Gap, Educational Opportunities for Homeowners and Financial Advisors on Holistic Retirement Plans

Finance of America Reverse LLC (FAR), a leading retirement solutions innovator and part of Finance of America Companies (NYSE: FOA), today announced the publication of its first-ever Home Equity Punch List.

FAR commissioned The Harris Poll to survey 2,000 U.S. homeowners 18 and older who live in the United States to obtain an understanding of home equity and its potential uses, as well as if and how home equity can fit into homeowners’ long-term financial goals. FAR intends to publish the survey annually and track homeowners’ perceptions and home equity utilization over time.

The survey’s inaugural findings reveal that older homeowners are nearly two times less likely than younger generations to consider utilizing home equity loans. This is despite being in a position to potentially benefit the most from these financing solutions with U.S. homeowners age 62 and older holding more than $10.6 trillion in housing wealth. A combination of factors can explain why 94% of Silent Generation and 89% of Baby Boomer respondents said they were unlikely to use home equity products including a reticence to consider the merits of home equity, a noted lack of knowledge around product benefits, and misaligned expectations that financial advisors would recommend home equity solutions if appropriate for their clients.

These findings underscore the need for a greater collective understanding of the merits of housing wealth leverage for certain older homeowners, including a deeper understanding within the financial advisor community. Strikingly, 90% of survey respondents with a financial advisor trust they would suggest a home equity loan if in their best interest. Yet only 29% of survey respondents with a financial advisor have ever spoken with them about a home equity loan. This statistic aligns with other industry data as well. According to a recent study by The Academy of Home Equity in Financial Planning, nearly two-thirds of financial advisors (63%) either can’t talk about or are not sure about their ability to speak to home equity. In this gap, FAR sees an opportunity for both consumers and financial advisors to learn about the stabilizing impact of housing wealth for 55+ homeowners and for a senior lending expert to play a role in the retirement planning conversation.

For FAR President Kristen Sieffert, these findings illustrate a prime opportunity to lean further into FAR’s education-first approach to home equity and using a reverse mortgage as part of a holistic retirement strategy. Sieffert commented, “Older homeowners have an incredible opportunity in today’s housing market to tap into a vital alternative source of funding. When you consider that many older Americans are living on a fixed income and are likely drawing on severely depreciated retirement accounts to pay bills, tapping into home equity may make sense given the historic home valuation levels. The survey results validate what FAR has long believed and evangelized through our partnership with the Financial Planning Association and our consumer marketing efforts – that an overwhelming majority of older Americans are not considering home equity in their approach to retirement but many should. This is why it is crucial that we continue to illustrate how they can check off more items on their punch list, including securing their golden years, by incorporating this asset into their retirement strategy. For thousands of U.S. homeowners, a home equity product such as a reverse mortgage may be the key difference in a plan that successfully sees them thrive through volatile years.”

Home Equity Punch List

The survey findings offer insights into the potential ways homeowners might use their home equity, as well as the different factors that influence how homeowners view home equity and home equity products. Below is a snapshot of high-level findings that will be tracked and analyzed on an ongoing basis to provide an overview of the home equity landscape in the U.S.

• 86% of respondents said their home’s value has increased since they bought it.
• 85% of respondents said buying a home was the best investment they ever made.
• 84% of respondents stated they want to live in their home for as long as they are able.
• Roughly 1 in 4 respondents (28%) indicated they are likely to take out a home equity loan in the future.
• Just over one-third of respondents (37%) have taken out a home equity loan before, with the majority (55%) using a HELOC.
• Of the 37% who have taken out a home equity loan, nearly two-thirds (60%) used their loan for home improvements or paying off debt.
• With access to 20-50% of their home’s value, most respondents would allocate the proceeds to: home improvements (33%), increasing retirement savings (30%) or paying off debt (26%).
• Among those unlikely to take out a home equity loan, the leading reasons include a lack of interest/need (42%) and not wanting to take on more debt (16%).

Detailed Survey Findings

Homeowners Closest to Retirement Are Least Likely to Utilize Their Home Equity

While older homeowners in the Baby Boomer and Silent Generation demographics are more likely to benefit from tapping into their home equity, they are the least likely to consider actually utilizing it due to risk perceptions, lack of product awareness, and perceived need.

• Those 55+ that indicated they were anxious about their ability to live comfortably in retirement are much more unlikely to take out a home equity loan (82%).
• Older generations are two times less likely to consider taking out a home equity loan compared to younger generations (94% of Silent Generation; 89% of Boomers; 61% of Gen X; 39% of Gen Z/Millennials).
• Less than half of Boomers (47%) considered home equity as a factor in their financial planning approach, compared to 74% of Gen X and 83% of Gen Z/Millennials.
• Among those respondents who have not taken out a home equity loan, 54% of Boomers and 65% of the Silent Generation stated it was due to lack of interest or perceived need.

Compared to younger generations, Boomers and the Silent Generation respondents indicated they were the least familiar with HELOCs and HECMs. Knowledge of home equity loan features was low among all respondents.

• Compared to younger generations, Boomers and the Silent Generation indicated they were the least familiar with HELOCs and HECMs.
  • HELOC Familiarity: 63% of Gen Z/Millennials; 60% of Gen X; 58% of Boomers: 57% of Silent Gen
  • HECM Familiarity: 59% of Gen Z/Millennials; 46% of Gen X; 37% of Boomers; 37% of Silent Gen
• 64% of respondents were either misinformed or unsure that some home equity loans can be used to eliminate your monthly mortgage payment.

Preparing for Retirement is a Top Priority for Homeowners

Across all ages, respondents expressed a strong desire to save and to plan for their future retirements, and to retire early if possible. A majority, however, experience anxiety over whether they will be able to achieve their desired lifestyle in their later years.

• Top financial priorities for all respondents include: 39% want to save for the future; 35% want to save for retirement; 26% want to increase their emergency savings; 25% want to become debt free / pay off debt.
• 68% of all respondents expressed a desire to retire and then age in place, yet more than half (53%) of respondents also expressed that they are anxious about their ability to live comfortably in retirement.

Older generations expressed a strong interest in retiring and aging in place and reducing costs.

• 76% of Silent Generation and 72% of Boomers expressed interest in retiring and aging in place.
• Reducing monthly cost of living is top priority for the Silent Generation (34%) and Boomers (27%), compared to one-in-five Gen X (20%), and roughly one-in-10 Gen Z/Millennials (13%).

Both Homeowners and Financial Advisors Could Benefit from Home Equity Education

Financial advisors represent a trusted resource about finances and retirement planning, but survey findings indicate only a small percentage of financial advisors incorporate home equity into their planning discussions with clients. Limited awareness or misaligned expectations about home equity products likely complicates these discussions with financial advisors and their clients. This may be because financial advisors aren’t licensed to sell home equity products, so other professionals may be needed to provide informed recommendations about how to utilize home equity. Therefore, homeowners should also seek out their own information and resources to better understand how to manage their home equity and be sure to consult with a licensed loan officer if they are interested in pursuing home equity products.

• 9 in 10 respondents trust their financial advisor would discuss a home equity loan if it is in their client’s best interest.
• Of those surveyed with a financial advisor, only 29% have ever spoken with their advisor about a home equity loan.

Given respondents’ desire to pay off and better manage their debt coupled with an interest in learning more about home equity, there could be an opportunity to boost awareness of home equity solutions and equip financial advisors with more information to support clients’ goals.

• 67% of respondents stated that they want to receive advice on how to manage debts and liabilities from their financial advisor.
• 43% would be interested in a home equity loan if they knew more about it.

Jason Rudman, Chief Customer Officer at Finance of America Companies, said: “Homeowners are sitting on more equity today than ever before. Whether through reverse or hybrid retirement mortgages, home improvement loans, or other innovative products, Finance of America is committed to delivering a diverse set of flexible, end-to-end home financing and home equity solutions that work best for our customers and their families. With such a broad offering, we are proud to be able to walk alongside our customers and provide strategic guidance about the ways to utilize their home equity at every step of their lifelong financial journey.”

For a more in-depth look at the Home Equity Punch List, please visit http://exploreretirement.far.com/homeequitypunchlist to access additional data and insights from the survey.

About The Harris Poll

The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas: building 21st-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.

Survey Methodology

The Harris Poll conducted the survey online on behalf of Finance of America Reverse, from June 2nd – 9th, 2022, among n=2000 US homeowners 18+ who live in the United States. Figures for age by sex, education, income, race/ethnicity, household size, marital status, and region were weighted where necessary to bring them into line with their actual proportions in the population.

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 reverse mortgage 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).

For more information, please visit www.far.com or find us on Facebook, LinkedIn or Twitter.

About Finance of America Companies

Finance of America (NYSE: FOA) is a dynamic consumer lending platform that provides customers at various stages in life with access to a diverse range of flexible, end-to-end home financing and home equity solutions. Product offerings include mortgages, reverse mortgages, and loans to residential real estate investors distributed across retail, third-party network, and digital channels. In addition, Finance of America offers complementary lending services to enhance the customer experience, as well as capital markets and portfolio management capabilities to optimize distribution to investors. The Company is headquartered in Plano, TX. For more information, please visit www.financeofamerica.com.

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