Reverse Mortgages Vs. Financial Moderation

by Peter G. Miller
August 8th, 2007

Al heavens, a real estate columnist with the Philadelphia Inquirer, says reverse mortgages “haven’t yet tapped the home-equity wealth of Americans age 62 and older, an estimated $4.3 trillion, according to the National Reverse Mortgage Lenders Association/Hollister Reverse Mortgage Market Index.

“In the last five years, data from the index show, slightly more than 300,000 reverse mortgages have been originated, representing less than 1 percent of market penetration.”

Heavens says that as we get older we try to have less and less debt.

“A study on debt I wrote about a few years back indicated that the older you are, the more unwilling you are to get into a financial hole. That survey also showed that younger Americans were digging themselves so far into the hole that they might never climb out.

“I know that, as I age, I worry about how much money I will have for retirement. My projections at age 56 show that if I keep up present efforts toward debt reduction, I will be able to retire about three weeks after I reach 117.”

I think people should be debt adverse. Not that having debt is always unwise, but rather too much debt is uncomfortable, limits choices and enriches others. Small is beautiful is not only the name of a book, it is also a philosophy which suggests living in moderation.

For those who do live moderately, and for those who save, the attractions of a reverse mortgage are limited.

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