If you’re short on cash in retirement but do have equity in your home, you might want to get a reverse mortgage, says Jane Bryant Quinn, author of How to Make Your Money Last: The Indispensable Retirement Guide. New rules for reverse mortgages have removed some of the pitfalls that made them problematic in the past.
The rules for reverse mortgages have certainly changed. The program is much safer than in the past primarily because FHA has placed parameters on the program that don’t allow homeowners to stray from a constructive path. This has been a very positive move but it takes time for the market to get over the skepticism of the past. The majority of the problems with reverse mortgages, prior to the series of changes that began in October 2013 to protect homeowners, were a result of flagrant and greed based activities initiated by homeowners. For example: Prior to the new program safeguards, if you took all of your available home equity out of your home and blew it on lousy investments, only to turn to the media and say “look what the program did to me”, this gave the program a bad rap. This also created unfair skepticism that clouded the program for all potential borrowers. Today the rules of the program have changed. It’s also, as touched on by the author, a growth vehicle for your untapped home equity that can create stability in retirement.
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George H. Omilan
President-CEO - NMLS# 873983
Jefferson Mortgage Group LLC
Helping seniors with Reverse Mortgages in Virginia, Maryland, DC and Pennsylvania.