In theory, a reverse mortgage can help under-saved retirees, but trends show that it is being used in ways that may harm these retirees in the long run as many more homeowners are exhausting much of their home equity as a lump sum to pay other debts, as opposed to taken in periodic portions to create a steady income stream.
In addition, many homeowners misunderstand the reverse mortgage and do not see that they need to stay current on upkeep, taxes, and insurance.
Though reverse mortgages are popular, retirees may also want to consider other funding options including annuitizing assets, selling the house and downsizing, or cash-out refinancing.
See Dan Kadelec, Selling Your Dream for Cash: The Unfortunate Mainstreaming of the Reverse Mortgage, Time.com, July 3, 2012.
For full article see: Wills, Trusts & Estates Prof Blog: Reverse Mortgages.
- Should You Get A Reverse Mortgage On Your Hixson Home? (signalrealtor.wordpress.com)
- Reverse mortgages can be risky (bankrate.com)
- Is A Reverse Mortgage Right For You? (boston.cbslocal.com)
- Study raises red flags on reverse mortgages (miamiherald.com)