The HUD version of the Reverse Mortgage is simply the most important financial tool available to Americans in retirement, or approaching retirement, today. As traditional financial planning stratagies have failed millions of those reaching retirement with 401K's at a fraction of what they had planned (and yet we still hear pundits claim that is the market's fault) risk based stratagies have cast a glaring light on the corrupt way in which Americans financial futures have been handled.
But there is a sollution, a way for individuals to improve their level of safety, security and indepence. If you still harbor doubts about the Reverse Mortgage as a vialble option - we challenge you to get the facts. Go to the source. Don't rely on hearsay, even from well meaning professionals, the majority of which know no more about how this program actually works than your hairdresser.
Here is an article from The Wall Stree Journal that is a must read:
And then this from NPR:
The current housing market has led many older homeowners into a dilemma: sell at a loss, or run the risk of staying in home past the point where it is a good idea. It has left many families wondering what to do with their homes, says a National Public Radio segment. For some, taking a reverse mortgage could be a viable option for them, NPR says.
Over the past five years, home prices have plunged by roughly a third. During that same period, the annual cost of residing in an assisted-living facility has increased 5.7 percent per year, according to a recent survey by Genworth, a long-term care insurance provider.
So what should be done with the house? Try selling in a depressed market? Or rent it until prices perk up? Or would it make more sense to take out a reverse mortgage and try to stay in the house, using cash from the transaction to hire more help?
…When a crisis hits — say, dad dies and mom needs to move in with a child — the family may see the house as a source of immediate cash to help pay for the move and more care. “It’s found money,” [says Realtor John Mike]. “They don’t care if they get $20,000 less than they would” by being patient. This rushed selling has been contributing to low prices in South Florida, he said.
Mike said renting out a house to create an immediate monthly stream of cash can be a better option than panicked selling. “I’ve seen people who have been very happy with renting out the house, and it’s better for the neighborhood because the house is occupied,” and the home-price comparisons don’t get driven down in a rushed sale, he said.
Another option is a reverse mortgage, which allows someone who owns a home, or owes very little on it, to draw down the equity in the form of cash. That money could be used to pay for personal care to help the occupant stay in the home.
But Mike said that while that path may work for some homeowners, too often “people have regrets because the reverse mortgage just delays the inevitable.” With home prices still falling and nursing aide costs rising, the cash from the reverse mortgage doesn’t go far, and before long, the owner needs to move, he said.
Linda Fodrini-Johnson, a past president of the National Association of Professional Geriatric Care Managers, said deciding what to do with a family home is not only a complicated financial decision, but an emotional one as well.
In many cases, “that’s the house you grew up in,” Fodrini-Johnson said. “It’s a special place.”
Because of the intense emotions surrounding a home, the decisions often cause conflicts among siblings. She urges families to communicate respectfully with each other to determine which options — selling, renting or getting a reverse mortgage — might make the most sense…
Listen to the full NPR segment.