Loan of last resort: It’s the mantra that long defined the reverse mortgage. But changes to the reverse mortgage program have made the loan more attractive for aging Americans, and are even considered a wealth management tool, according to personal finance columnist Liz Weston.
In a recent Los Angeles Times personal finance Q&A, Weston responds to a reader’s question about whether to take out a second mortgage to pay off the remaining debt in their home and fund necessary renovations. Instead of taking out a $200,000 mortgage, though, Weston advises the reader to consider a reverse mortgage.
“Although once considered expensive loans of last resort for people who were running out of money in retirement, changes in the federal reverse mortgage program caused financial planners to reassess the no-payment loans as a potential wealth management tool,” she writes. “The idea is that homeowners could tap the reverse mortgage for funds, especially in bad markets, instead of depleting their retirement accounts.”
Still, reverse mortgages are complex products, she notes.
“You’d be smart to find a savvy, fee-only financial advisor to assess your situation and walk you through your options.”
To read the full Q&A, click here.
Written by Emily Study