Reverse mortgages: Are they for you?
US News & World Report, June 29th, 2006
For seniors with little cash and lots of value socked away in their home, the
reverse mortgage is rapidly gaining popularity as a way to raise money without
having to move.
From July 2005 through March of this year, the federal government insured
48,088 reverse mortgages, up more than 20,000 from the previous year. And in May
alone, a record 8,414 reverse mortgages were approved.
Essentially, seniors are borrowing against the value of their homes without
needing to pay the money back until they move out or die. Despite the growing
number of reverse mortgages, however, they are "not necessarily the most
desirable option for most older households," says Susan Wachter, professor of
real estate at the University of Pennsylvania's Wharton School. "This always
will be a niche product."
Who fits the reverse-mortgage profile? First, there's an age limitation.
Under the Federal Housing Administration program, only people older than 62 can
get a reverse mortgage. Eligible homeowners should also be low on cash, unable
to take money out of retirement funds, and having trouble paying for basic
expenses, says William Supper, a financial planner in Morristown, N.J.
Read more of this article. Find out more about reverse mortgages.
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