Apparently the view on reverse mortgages is reversing. More seniors and baby boomers are reconsidering the idea of a reverse mortgage.
What is a reverse mortgage?
Everyone knows what a mortgage is; most of us have sweated those payments at one time or another. A reverse mortgage (RM) is the opposite, instead of you making a mortgage payment the lender pays you a mortgage payment which you can use to pay any of your other bills. The downside of course is the lender could end up owning your home when you die.
In any case the average age of the reverse mortgagee is declining. According to the U.S. Department of Housing and Urban Development (HUD) in 1990 the average age was 77 and in 2010 it was 73. The National Council of Aging survey found the average down to age 71 and a half.
At 62 a homeowner is eligible to take out a RM. Of those retiring at age 62; 1 in 4 are considering a reverse mortgage in order to retire or to cancel the debt on their home.
Why are younger seniors considering an RM?
Most 401k, 403b and other contribution style retirement plans have been devastated by the 2008 financial meltdown and during the ongoing financial crisis these plans have not recovered let alone grow. Worse many of these retirement plans are only increasing by the additional employee contributions.
Apparently for many the decision is to keep working or mortgage the home to retire.
Would you mortgage your home in order to retire? Or just keep working?
You may ask questions in the comments or contact me privately Tim Barton, ChFC