FOA Finance of America Companies Inc

Second Annual “Home Equity Punch List” Survey Finds Growing Concerns Over Expenses and Financial Longevity

Polling Points to Persistent Need for Broader Education About Specific Uses for Home Equity and Reverse Mortgage Products

Finance of America Reverse LLC (“FAR”), a leading provider of reverse mortgages and part of Finance of America’s (NYSE: FOA) modern retirement solutions platform, today published its 2023 Home Equity Punch List. The survey tracks U.S. homeowners’ perceptions and understanding of home equity, as well as sentiment related to long-term financial planning and retirement-related topics over time.

Topline Survey Findings

FAR’s second annual Home Equity Punch List survey reveals persistently high anxiety among U.S. homeowners as it relates to their economic outlook and personal finances. Nearly 8 out of 10 (79%) homeowners surveyed feel anxious about the state of the U.S. economy, the same as 2022, while anxiety about financial expenses increased further.

When compared to last year, the study found U.S. homeowners feel more anxious about their ability to afford a range of needs and wants.

• Approximately 6 out of 10 homeowners (61%) worry about unexpected healthcare costs in retirement, up from 48% in 2022.
• 4 out of 10 (40%) homeowners feel anxious about their ability to pay off debt, up from 36%.
• 41% of homeowners feel anxious about their discretionary spending, such as purchasing a new car or taking a trip, up from 32%.
• Concerns about long-term financial matters are greatest among women – with 82% anxious about the economy (compared to 75% of men) and 54% anxious about their ability to retire on their terms (compared to 46% of men).
• However, despite increases in financial anxiety, homeowners still aren’t looking to their housing wealth to help assuage their concerns as the likelihood of using a home equity loan increased only marginally with a slight uptick from 28% in 2022 to 32% in 2023.

A key finding points to varying levels of product knowledge and low familiarity with the different ways financial products can be used as potential factors contributing to financial anxieties for some homeowners. Notably, respondents familiar with a reverse mortgage were also more likely to know the different use cases of financial products – with 73% reporting they were aware home equity could help supplement income in retirement, compared to just 40% for those unfamiliar with a reverse.

Drilling down further into the overall confusion or unawareness of the specific uses for certain financial products, interestingly, women respondents reported being less familiar with products than men, with retirement accounts like a 401(k) or IRA as the exception where women and men were equally familiar. Baby Boomers reported being less familiar with home sharing, cash-out refinancing, reverse mortgages, and cryptocurrency when compared to Gen X and Gen Z/Millennials. Women and older generations were also less familiar with different financial products and less aware of how the benefits of home equity – and reverse mortgages specifically – can help address many of their financial concerns, including the ability to pay for certain expenses, such as healthcare costs and home renovations.

Commenting on the survey results, FOA Chief Marketing Officer, Chris Moschner said, “Homeowners’ concerns about the economy remain high and they are more apprehensive about their ability to meet their future financial goals compared to last year. This coincides with the fact that more than three in four seniors can’t meet their financial obligations in retirement and America’s retirement savings gap is nearing $4 trillion. There is a persistent lack of education and limited understanding of the benefits of home equity-based solutions and reverse mortgages – such as supplementing retirement accounts, helping older homeowners age in place, and paying for long-term care needs – exacerbating the problem further. However, we have an obvious solution hiding in plain sight, that can help allay concerns about financial longevity. Now is the time to tackle this challenge head on.”

Moschner continued: “It’s promising to see an increase in the number of older adults who are open to tapping their home equity. However, when you consider that seniors aged 62 and older have amassed more than $12 trillion in home equity, there’s a massive opportunity to use the home as both a shelter and a springboard for today’s modern retirees.”

Increased Financial Anxiety Among U.S. Homeowners

Anxiety related to the state of the U.S. economy ranked as the top concern among all homeowners, followed by the ability to cover healthcare costs and meet various future financial needs.

• 79% feel anxious about the state of the U.S. economy (same as 2022).
• 61% worry about unexpected healthcare costs in retirement (up from 48%).
• 40% feel anxious about their ability to pay off debt (up from 36%).

Women, Younger Generations Most Concerned About Financial Futures

Concerns about long-term financial matters are greatest among women, followed by younger generations.

How anxious do you feel about each of the following?

(% Very/Somewhat Anxious)

Females

Males

Gen Z / Millennials

Gen X

Boomers

The state of the U.S. economy

82%

75%

74%

81%

81%

Ability to retire on your terms

54%

46%

65%

65%

35%

Ability to pay for an unexpected medical expense in retirement

53%

41%

59%

54%

37%

Ability to support your family financially

48%

40%

62%

54%

29%

Women and younger generations expressed more uncertainty relative to their home’s value.

• When asked to estimate their home’s current market value: 14% of women were unsure, compared to 9% of men; 15% of Gen Z/Millennials were unsure, compared to 12% of Gen X and 9% of Boomers.
• 38% of women and 51% of Gen Z/Millennials worry about their home losing value; compared to 32% of men, 42% of Gen X and 22% of Boomers.

Financial Product Awareness Ranks Lowest Among Women and Baby Boomers

While 81% of female homeowners and 85% of male homeowners report being familiar with retirement accounts, like a 401(k), this gap widens significantly when it comes to other financial products. Similarly, when compared to younger generations, Baby Boomers reported less familiarity with a wide range of financial solutions.

How familiar are you with the following?

(% Very/Somewhat Familiar)

Females

Males

Gen Z / Millennials

Gen X

Boomers / Silent Generation

Personal loan (home improvements / renovations)

68%

75%

77%

74%

67%

Fixed rate home equity loan

58%

71%

66%

68%

62%

Home equity line of credit (HELOC)

52%

69%

63%

63%

57%

Home sharing

43%

50%

61%

48%

37%

Cash-out refinance

32%

52%

57%

44%

33%

Reverse mortgage

30%

50%

52%

38%

35%

Cryptocurrency

28%

46%

63%

40%

20%

Contributing to financial anxiety is a lack of knowledge about financial products that offer potential solutions to homeowners’ challenges.

• 42% of women know that home equity can help supplement income in retirement, compared to 65% of men.
• 84% of Boomers and 84% of Silent Generation feel confident they would qualify for a home equity loan – despite their ability to qualify for financing decreasing as they retire due to income requirements on many products.

Nuances between home equity product types and their different features add to confusion across all homeowner demographics. When asked to specifically identify the actual use cases for reverse mortgages – like the ability to pay off a mortgage or eliminate a monthly mortgage payment – many were unsure.

• 38% of women and 38% of Boomers know that a reverse mortgage can be used to pay off a mortgage, compared to 46% of men and 49% of Gen Z/Millennials.

Summary of True Use Cases for Home Equity Loans (all respondents)

Not Sure

False

True

Making home improvements/renovations

12%

5%

83%

Accessing a line of credit for needed expenses

19%

9%

72%

Paying off debt

19%

10%

71%

Paying for in-home/long-term care

32%

19%

49%

Paying off a mortgage

27%

35%

37%

Eliminating a monthly mortgage payment

28%

40%

32%

Room to Expand Home Equity Education with Homeowners and Financial Advisors

Similar to the 2022 survey, this year’s findings illustrate the need to expand awareness efforts and further educate homeowners and financial advisors about the ways to incorporate home equity, and reverse mortgages specifically, into a long-term financial plan.

• Roughly 4 in 10 homeowners (37%) work with a financial advisor, similar to 2022.
• Of those surveyed with a financial advisor, nearly 9 in 10 (88%) trust their financial advisor would speak to them about a home equity loan if in their best interest.
• However, only 31% have ever spoken with their advisor about a home equity loan (compared to 29% in 2022).

According to a study by The Academy of Home Equity in Financial Planning, among the factors that contribute to financial services professionals not making mortgage, home equity loan, or reverse mortgage recommendations to clients are compliance requirements and lack of understanding of strategies and products. As FAR’s survey data suggests, this dynamic also creates a mismatch between consumer expectations and the current reality for financial advisors’ ability to speak to these products.

Conversations with financial advisors about home equity and strategies to age in place are less common among women and older generations. These conversations are even fewer among Baby Boomers compared to younger generations.

Agree with statements re: financial advisor

Females

Males

Gen Z / Millennials

Gen X

Boomers

Spoken with advisor about ways to remain in current home in retirement

59%

70%

76%

73%

54%

Spoken with advisor about ways to pay for long-term care

53%

71%

75%

68%

52%

My advisor considers home equity as part of retirement plan

49%

57%

77%

60%

38%

“We are well-positioned to help retirees live more comfortably and thrive in retirement; yet that requires greater education and collaboration among homeowners and financial advisors alike to help narrow the familiarity gap. This can be accomplished by cutting through the clutter and demonstrating how reverse mortgages have materially benefited retirees and the distinct benefits that can flow from home equity-based financial solutions,” said Steve Resch, Vice President of Retirement Strategies at FAR.

Resch concluded, “We are committed to putting the home at the center of a modern retirement so older homeowners have more options and better outcomes later in life.”

For a more in-depth look at the Home Equity Punch List, please visit Far.com/homeequitypunchlist2023 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 May 15 – 26, 2023, among n=2011 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 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).

©2023 Finance of America Reverse LLC is licensed nationwide | Equal Housing Opportunity | NMLS ID #2285 (www.nmlsconsumeraccess.org) | 8023 East 63rd Place, Suite 700 | Tulsa, OK 74133

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