A source of additional income for seniors
A reverse mortgage is a home loan available for seniors. It does not require the borrower to demonstrate good credit, income or other assets. According to a study by the Federal Reserve, they must simply be at least 62 years old and have substantial equity in their home - generally more than 40 or 50 percent. Apart from the qualifications, what sets a reverse mortgage apart from traditional mortgages is that no payments are required on the loan while the borrowers remaining living at home. Instead, interest compounds on the principal, much like a savings account in reverse, and the entire balance is repaid at one time when the borrowers die, sell their homes or move.
Help for seniors on fixed incomes
At least a year before the home equity- and stock market-gutting attendant to the recession began, the Center for Retirement Research reported, "many of today's workers are at risk of having insufficient resources in retirement." Reasons included rising Social Security retirement age, declining traditional pensions, low retirement savings and longer life spans. The Center noted the largest non-pension asset for most home owner was their home. In a related study in 2000, reported in Senior Journal the AARP concluded a majority of older Americans want to remain living at home for as long as they can. Members of Congress, making use of earlier data along the same lines established the reverse mortgage to respond to these issues.
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