Reverse Mortgages,Reverse Mortgage For Homeowners,Home Equity Loan

The average reverse mortgage holder is a 76-year-old widow who lives on less than $13,000 per year, including Social Security benefits. The reverse mortgage allows her to maintain an independent lifestyle and remain one step ahead of poverty. But reverse mortgages are not used by the majority of elderly homeowners. Even elderly people in poverty aren't using the product. "More than 620,000 elderly households in poverty could be raised above the poverty line if they obtained a reverse mortgage," says Nandinee Kutty, a professor in the department of consumer economics and housing at Cornell University. "These households constitute 29 percent of all poor elderly homeowners, and 18 percent of all elderly households in poverty. "Reverse mortgages require minimal government involvement, a lot less than many entitlement programs aimed at alleviating poverty," she says. "They could really help keep poverty at bay for many of the very poor." In some cases, however, these elderly poor would be better off selling their homes and investing in an annuity to provide them with money for their later years. They don't do this because they have a strong attachment to their homes and don't want to move. many of the poorest Americans hold on to their home because it is the only asset they can pass on to their children. If they borrow against it, they leave nothing for their kids. "There is also a lack of information about the options, so that many of the poorer seniors are not aware that reverse mortgages exist," says Kutty. "But a larger problem is that many of the poorest Americans hold on to their home because it is the only asset they can pass on to their children, especially if the children are not well-off either. If they borrow against it, they leave nothing for their kids."

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One Step Ahead of Poverty