AARP does not endorse a reverse mortgage lender or program but the do clearly state that its a great tool to use to supplement income in times where the homeowner is looking for additional cash flow. In addition, the reverse mortgage essentially locks in the principle limit it allowed at the close of the loan so even if the home value continues to decrease, the homeowner will be guaranteed a certain amount of their equity in the form of accessible cash. The RM also offers a credit line growth function that grows over time more than what today's CD rates are returning. A $150,000 credit line can grow at 4.5% each year or around $6750 A YEAR and if the rates go up (as they are tied to the one year Treasury yield), then that growth rate goes up even if the home value decreased over that same time period.
Over time, and a reverse mortgage is not a short term loan, that growth could give the homeowner increased access to cash flow while the housing market corrects itself.
Its one option, not the only option, that a someone can look into. The other options are moving out, downsizing or suffering through it. Give me those options and I'm in a reverse mortgage.
Rickof MD2:31PM September 26, 2008
Real estate value will rebound. Real estate is one investment that does respond to supply/demand.
There are a lot of foreclosed properties on the market right now and they're being bought by bargain hunters and investors who know a bargain when they see it.
But as security for retirees, unless they have a very good cash reserve (as in savings of whatever sort), a mortgage is something they should not have unless it is as one of the bargain hunting buys for profit.
Working class retirees should have made sure they had their mortgages paid before retiring as their rule #1 for retiring because they normally must manage a much reduced income for everyday expenses.
Financial planners over-stress savings & investments and under-stress becoming debt free as criteria for retirement security.
HillbillyBillof TN8:07AM September 23, 2008
Figure too, that many were expecting to sell their homes for a profit; down-size into a smaller condo' or home, and use the equity/profit, as part of their long-term savings to supplement their retirement income and social security.
Let's hope some of them are wise enough to offer those spare bedrooms to young singles looking for affordable rent.
Let's also hope there is room in some of those homes for the 'offspring' to get back to when they lose their jobs; are on unemployment, and (again) need a shelter at a nominal sum.
I do believe neighborhoods should form groups that will meet and seek to support each other through these times.
If it takes a small sum of money from each and every concerned neighbor and/or family member, to compile a 'bridge loan' that allows another family to stay in their home a few weeks or months longer, they can always ask for some type of collateral or return when the home is sold or refinanced.
People can learn how to create their own 'small bank-like' reserve and resource. It will be a 'grass roots' effort; a kind heart - a commitment to their community, but there can be ways to weather out some of this storm.
We're applying these principals right now, and have helped 3 families keep their homes.
Dianeof CA6:21PM September 22, 2008
Figure too, that many were expecting to sell their homes for a profit; down-size into a smaller condo' or home, and use the equity/profit, as part of their long-term savings to supplement their retirement income and social security.
Let's hope some of them are wise enough to offer those spare bedrooms to young singles looking for affordable rent.
Let's also hope there is room in some of those homes for the 'offspring' to get back to when they lose their jobs; are on unemployment, and (again) need a shelter at a nominal sum.
I do believe neighborhoods should form groups that will meet and seek to support each other through these times.
If it takes a small sum of money from each and every concerned neighbor and/or family member, to compile a 'bridge loan' that allows another family to stay in their home a few weeks or months longer, they can always ask for some type of collateral or return when the home is sold or refinanced.
People can learn how to create their own 'small bank-like' reserve and resource. It will be a 'grass roots' effort; a kind heart - a commitment to their community, but there can be ways to weather out some of this storm.
We're applying these principals right now, and have helped 3 families keep their homes.
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Rick of MD 2:31PM September 26, 2008
HillbillyBill of TN 8:07AM September 23, 2008
Diane of CA 6:21PM September 22, 2008
Diane of CA 6:21PM September 22, 2008