Which explains reverse mortgages:
This past year has shown a large increase in the number of people applying for reverse mortgage loans. A reverse mortgage loan is a loan by which older people, whose principal asset is often a home which might have to be sold in order to provide money for other living expenses, may borrow on the value (equity) in that home. The loan proceeds are paid by the lender to the homeowner in equal installments (usually monthly), or as needed under a line of credit, or in one or more lump sum payments or in any combination of these features.This is the opposite of obtaining and then paying off a conventional mortgage. That is why it is called a “reverse mortgage.” Moreover, the homeowner does not have to repay the reverse mortgage loan until the loan “terminates” or ends.
Now that's a pretty basic description and a lot of value is tied up in the specifics, such as the value of the home in a declining market. I guess I wonder what several years of decline of value might do to the eventual cost of the loan.
There's definitely pressure on senior citizens to figure out what to do about their completely paid-off homes. In our area, if you sold your home 4 years ago, you might have made over 20% more than what you will today, depending on the development and the condition and age of the home. Add inflation into that and a four-year delay into an eventual decision could be seen as VERY expensive to those trying to time their exit from home ownership.
In our neighborhood, we're starting to see a lot of for sale signs, and they seem to be mostly from older homeowners, retired and looking to downsize. This "turnover" has been happening for several years as the neighborhood has been gradually been getting younger, resident-wise, but it looks, at least on the surface, to be increasing significantly now.