Retirement just got tougher, with forthcoming new rules that will make it more difficult for senior borrowers to draw down on their home equity through the use of reverse mortgages, writes “Nerd Wallet” columnist Mike Anderson this week.
Pointing to the September 30 cutoff for the former program rules, the changes are “bad news” for seniors, Anderson writes, making the program less attractive.
The column details the changes from a limit on the initial draw borrowers can receive to a decrease in the percentage of a home’s value its owner can access under the program starting October 1.
“The changes are intended to make people more careful about how they fund their retirement,” the column writes. “The FHA wants borrowers to take out only what they need and what they can afford. The program strives to be less a safety net for financial emergencies and more a longer-term financial planning tool.”
Yet the outcome is ultimately an additional expense for an already costly process of faring financially in retirement, Anderson writes.
“Of course, these changes present additional challenges to the already expensive process of retirement.”
Written by Elizabeth Ecker