Responding to a question posed by a caller into CBS Money Watch’s radio show Jill On Money, the show’s host and financial expert Jill Schlesinger weighs the option of a reverse mortgage for the caller.
The caller, who qualifies based on his age and home equity, says he is interested in tenure payments that will boost his monthly cash flow for life.
There are some considerations to make when getting a reverse mortgage at such an early qualifying age, Schlesinger notes, including inflation over time.
“Your $1,800 a month isn’t going to be $1,800 in 20 years,” she says, noting that what can be purchased in today’s dollars will not be the same over time.
“Augustine from CA is considering whether a reverse mortgage on his $450,000 house is a good idea for him,” Schlesinger wrote in a summary of the show. “As I reminded him, the fixed payment of a reverse mortgage will remain constant, while prices will increase. In other words, the reverse mortgage payment that might make sense today, will not keep pace with inflation.”
While she did not support the decision fully, Schlesinger recommended taking the loan later down the road, around age 73 instead.
Listen to the full discussion via podcast at 37:50.
Written by Elizabeth Ecker