Saving up for retirement is something that everyone should start working towards the moment they enter the workforce. But it’s not as easy as it sounds. Life can throw curveballs at us, from unexpected medical emergencies to a sudden job loss. And with so many baby boomers reaching retirement age over the recent past and into the foreseeable future, there’s great concern that many of them won’t be able to live comfortably throughout retirement, or even meet basic needs.

When retirement savings aren’t adequate enough to fulfill these needs, home equity can step in to fill the void through a reverse mortgage.

What Exactly is a Reverse Mortgage?

If you’ve got equity built up in your home, you can potentially use it to fund many expenses throughout retirement. Basically, a reverse mortgage is a type of loan for older homeowners (aged 62 or older) who borrow against the equity in their homes. It’s a great option for retirees since there’s no need to make monthly mortgage payments to pay it back. Instead, the loan is repaid when you sell your home or after you’ve passed on. At this point, the estate will be obligated to repay the loan with the proceeds of the sale of the home.

The amount of money you’re eligible to borrow depends on a number of factors, including:

• Age
• Property value
• Interest rate

Basically, the older you are and the more your property is worth, the more money you’ll be eligible for. You can collect the cash in a lump sum, through a fixed monthly payment, or through a line of credit.

Who is Eligible for a Reverse Mortgage?

To qualify for a reverse mortgage, you’ve either got to outright own your home or have a low outstanding balance on your current mortgage. You also can’t be delinquent on any federal debt, and need to be able to make payments on time for carrying costs (such as property taxes, HOA fees, home insurance, etc).

There are many types of reverse mortgage programs, but the most common is the Home Equity Conversion Mortgage (HECM). These types of reverse mortgages are issued by private banks and are backed by the Federal Housing Administration (FHA).

Not only are there no medical requirements to be eligible for a reverse mortgage, there are also no restrictions on how you choose to spend the money. However, the main drawback to this type of reverse mortgage is that the maximum amount you can obtain from this loan is capped at either the appraised value or the mortgage limit of $625,500, whichever of the two is lower.

How Much Does it Cost to Obtain a Reverse Mortgage?

Just like any other type of loan, there are fees attached to reverse mortgages.

For starters, you’ll have to pay a Mortgage Insurance Premium (MIP), which guarantees that you’ll still get your loan payments even if the loan servicer goes out of business. Usually, this fee is paid up front, and typically costs 0.5% of the appraised value of your home, or 2.5% if more than 60% of your available funds are taken out in the first year. On top of that, you’ll need to contribute 1.25% of your outstanding loan balance every year.

If your home is appraised at less than $125,000, you may be required to pay your lender an origination fee up to $2,500. If your home is appraised at more than $125,000, 2% of the first $200,000 of your property’s value may be charged by your lender, in addition to another 1% of any amount over $200,000. These loan origination fees are limited to $6,000.

Other closing costs that are typical with mortgages will also need to be covered, including property appraisals, title searches, home inspections, credit checks, and taxes.

The beauty of reverse mortgages is that the funds can be used for just about any purpose. Whether you need to make improvements on your home, pay for medical bills, or simply live more comfortably throughout your Golden Years, a reverse mortgage can be a great way to free up some capital and boost your cash flow.

Some of the fastest growing states in the US are in the sunny south, according to the US Census Bureau.

Florida, Texas and California made up 27 percent of the population in 2015, yet were responsible for 48 percent of the population growth in the country from 2014 and 2015. Compared to the average population growth in the US since 2010, Texas experienced a 9.2 percent growth in population during that same time period, and Florida and California saw a growth rate of 7.8 percent and 5.1 percent, respectively.

If this trend continues, the population in these three states combined could reach 100 million by 2030.

This is the largest surge in migration to the south since the recession of 2007-2009 that temporarily stunted population growth in these states. In contrast, population growth in the ‘Snow Belt’ – the Northeast and Midwest — only grew by approximately 258,000 residents combined throughout 2015.

Strong Recovery Following the Recession of 2007-2009

Based on these numbers, it’s clear that the trend of southern migration has resumed following a temporary stall as a result of the recession from eight years ago. The labor and housing market has been picking up steam over the last few years, but migration shifts to the south have been lagging behind up until now.

The wave of population migration to the south proves an improvement in financial health and economic confidence in Americans who are increasingly willing to pick up and go. Many of these southbound moves between 2014 and 2015 were the result of a quest for job opportunities, better climate, and the need to be closer to relatives, according to a census report.

Texas, in particular, has been a major target for job seekers around the country, which is largely why the state realized a spike in population growth of 490,000 residents between 2014 and 2015. Georgia and Nevada were also strong magnets for those seeking employment, considering the states’ huge spikes in job growth.

Florida Now More Populated Than New York

Although migration to the Sun Belt has been strong, it still hasn’t reached its record levels from the mid-2000s, with the exception of Florida. Last year, the Sunshine State passed New York as the third most populated state in the country. From 2014 to 2015, the population in Florida grew by 1.8% to 20.3 million. During the same time period, New York’s population only increased by 0.2% to 19.8 million.

The housing market had been suffering throughout the recession and beyond, but improvements on the real estate and employment fronts could help explain the major population growth. Foreclosures in Florida have dropped significantly, and the unemployment rate of 5% is a drastic reduction from its peak of over 10% in 2009.

Foreign Immigration Playing a Role in Population Growth

While domestic migration has been largely contributing to the population growth in the sunny states of the US, outside immigration  – particularly from Latin America- has also been a big player. In fact, this immigration has been an important driver in the relatively youthful populations in Texas and California.

Despite the fact that the overall population in the country is aging quickly as the baby boomer generation hits retirement age and beyond, states such as those in the south have been able to keep their age demographic youthful by appealing to immigrant workers. Combined, California, Florida, and Texas saw an increase of 412,000 immigrants – predominantly from Latin America – between 2014 and 2015. Of the three, California experienced the biggest increase.

In states where population growth expands rapidly, the economy also grows quickly. A strong economy is often a big reason why Americans move to a certain state, or the result of people moving there. Median household income and property values also tend to increase as a result.

The housing market in these states continues to post strong numbers, and the rapid growth in population is no doubt playing a key role.

The housing market across the US is on its way to a full recovery, with 26% of the country’s markets surpassing previous records in property values since the peak of the housing bubble.

This may come as no surprise in many markets, including California and New York. The median price of homes in the San Francisco Bay area hit $702,150, a 15.2% increase from the same time last year. Southern California saw a hefty boost in property values, with the median home price reaching $453,910, a 7.9% increase from last January.

A similar effect is being seen in many other parts of the country too. Median property values in Nashville, TN increased 9.5% to a median price of $189,100, while those in Phoenix, AZ spiked 8.1% to $218,300. Boston, MA median home prices increased 5.9% to $387,400, and Seattle, WA now boasts a median home price of $373,000, up 9.4%.

Homebuyers Are Left With Limited Options

Many factors are responsible for driving the prices of properties up, but perhaps one of the most critical is housing supply. The spike in property values in many markets across the US is the direct result of tight inventory, which means the number of listings is a lot less compared to a few months ago.

With an inventory squeeze and a spike in property values, buyers are being left with fewer options when it comes to relocating or getting into the market at all. Even with a decent down payment and healthy credit, finding the right home can be a real challenge.

San Fernando Valley’s housing inventory dropped 13% since the same time last year, and Portland, OR inventory is dipped 28%. And it’s the same story in many other markets across the US.   

With limited options, multiple offers and bidding wars are imminent. And nothing drives sale prices higher than a handful of eager buyers doing their best to outbid each other. Many are coming in with all-cash offers to ensure they’re the winning bidder, making it tough for younger first-time homebuyers to compete.

Rent isn’t exactly cheap either, making it hard to save up to get into an expensive market.

How Much Higher Can Prices Go?

“Housing bubble” has been a really popular buzzword in the world of real estate these days, and for good reason. Many are concerned that a new housing bubble is closer than initially anticipated, especially in red-hot markets all over the state of California. Many centers have been experiencing double-digit increases in home prices for a few months now, sparking the question about how much longer such a rapid pace can last before losing steam and succumbing to a bubble. 

Despite the labor market showing strength overall, it’s still incredibly difficult to realistically afford certain prices based on income, igniting a housing affordability issue in many centers across the country. 

With a heightened level of competition for properties in markets like San Francisco, Seattle and Phoenix, the combination of limited inventory and high property prices can be a dire one for homebuyer hopefuls looking to get into the market.

The Brighter Side: Rising Equity

While homebuyers might be negatively affected by spikes in home prices, many who already own homes are enjoying sizeable equity in their properties. More homeowners owe less on their mortgages that what their properties are worth compared to last year, which means they’ve got the advantage of more equity.

Once they’ve built up a certain level of equity, they can make a handsome profit on the sale of their properties, and open up inventory at the same time. 

Another bright side to the story is that the overall housing market in the US is not playing catch-up anymore as it had been since the recession eight years ago.

But in the meantime, buyers have to deal with a shortage of inventory and an affordability issue that will likely continue well into the near future until the bubble finally bursts.