Living For Today – Planning For Tomorrow
Much has been written about the use of reverse mortgages for retirees seeking a “boost” in their retirement income. The Squared Away Blog of the Center for Retirement Research at Boston College (CRC) offers a perspective on the reverse mortgage strategy and utilizes a comparison chart between two alternatives: Alternative #1 – using a reverse mortgage strategy and Alternative #2 – downsizing to a smaller home. You can access the report, entitled “Primer: Home Equity” via the Center for Retirement Research website.
An interesting response to the blog article came from one reader who noted that one of the realities of downsizing is that there is often a difficulty to find appropriate (“smaller”) housing in certain areas of the country and also that increases in property taxes are “eating into (retirement) income.”
The CRC article also notes that when applying for a reverse mortgage – “regulators require that homeowners meet with a government-approved housing counselor to apply for a loan.”
Finally, according to CRC, few retirees are taking advantage of reverse mortgages. One suggested reason is “reverse mortgages are an unfamiliar and complex financial product, and their costs, benefits, and risks are poorly understood.”
Any loan/mortgage is a legal document and as such should not be entered into unless the borrower understands both the short-term and the longer term financial impact.
In addition, I would add, that before you sign any contract/document, particularly one that is unfamiliar and complex, seek competent, professional advice to review the details. At the bottom of this page is my column “How I Can Help You”.
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