Given a multi-trillion-dollar accumulation of home equity held by seniors, the question remains: how best to use it to fund retirement? A CBS News column asks this question, citing research by the National Reverse Mortgage Lenders Association that finds home equity increased by $46 billion in the third quarter of 2011, amounting to $3.19 trillion in total.
Reverse mortgages are one way to use that home equity, CBS reports, noting some possible uses of reverse mortgage funds such as paying for high medical or long-term care bills, home repairs, as supplemental income or to purchase a new home.
There are also alternatives to consider, the article states, such as renting the home out, taking in a boarder or roommate, or selling the home entirely.
“If you aren’t purchasing long-term care insurance, then I’d seriously consider holding your home equity in reserve for the day when you might incur high bills for long-term care,” the columnist advises. “At that time, you can take out a reverse mortgage or home equity loan. If you don’t ever need long-term care, then the home equity will provide a legacy to your children.”
Read the full CBS News article.
Written by Elizabeth Ecker