You can access equity with reverse mortgage if you qualify. That's a major upside.
With respect, it ain't like that either. Some people get breaks and some people do not. Some people get bigger breaks than others. Some people get shafted from day one. Boomers and Gen X aren't setting some magic bar and we aren't intentionally making life more difficult for younger generations - the world is what it is and requires what it requires to get ahead. If these breaks don't exist then they don't exist and no one said life was going to be fair. That said, I see people who belong to younger generations making it work on two very achievable incomes so long as the goal isn't a 3000 sqft house just outside Boston while driving two $850 per month cars.
That's you, but for me and many others, there is value there.
Yes. A reverse mortgage is one of the most misunderstood loans there are. Yes..it's a loan. But not paid back until you pass. I did this once before-I will do it again as an example. House is worth 400,000. Bank gives you a reverse mortgage of 100,000.00 You die. Heirs sell your house for 400,000. They pay back 100,000.00 ( or whatever principal there is). They keep $300,000. It's a very simplistic example I gave.
What does this mean? It is a value to pull equity out . Obviously you have an issue with taking out some equity. I guess you would rather leave it to your heirs instead of buying a new rv, vehicle, or taking that once in a lifetime vacation. Yea..OK. I sure you kids will enjoy it.
There are many other uses as well. Just one example, every business loan I've ever taken and repaid required a personal guarantee and that guarantee was tied to my net worth which was tied to the market price of my home minus the outstanding mortgage. This kept me from having to take SBA loans, the worst and always last resort loans, and instead, get a fixed rate at a much lower interest rate and no closing fees. That directly saved me significant money. There are other examples as well..
I'm a savvy person in finance and business. Yes, that loan based in part on the appreciation of my home, allowed me to reinvest into my greatest asset of all, my business, at a phenomenal rate and terms. That $500K investment in my business within two years was returning 2x that per year and that loan was paid off in year 3. The value of my home allowed me to use OPM at a minimal cost to me, it allowed me to not have to reduce my personal cash flow, and it's paid off. I've done this several times with capital improvements in my business.
Ok, but come back to reality, the inflated home values are here, so instead of longing for an alternative universe where home prices are lower, learn to work within reality. You've made two very different statements here. One statement was you see no value in high home appreciation and the other statement now is you wish it hadn't happened. I and others have clearly shown there IS value in home appreciation IF you're smart about it. As for your wish for lower home prices, you can wish in one hand and poop in the other and see which one comes true first. I don't waste time wishing reality was different, I accept it and learn to work within it.
I agree. This is a false economy. I am not against reverse mortgages for people late in life who need it - but how does it help someone not so late in life? What do I take a reverse mortgage to pay my insurance and taxes?
The net negative affect is lack of household formation and delay / cancel of many social norms. Things like low birth rates for example. Us older farts are the past. Nice that we’re wealthy now. How does that help anyone really?
One thing I can think of is moving from a HCOL area to a LCOL area. In years past, this was only folks moving out of NY and CA.
Well, I'm still in wealth accumulation mode so I'm there yet and I get what you're saying but at the same time I don't control how it works, I've just learned how to navigate my way within the waters I've been thrown into with everyone else.
I am not blaming anyone like you. Don’t hate the players hate the game.
I moved to a lower COL area. Best thing I ever did. However I have a very portable job and I travel for it constantly so where I start in the morning doesn’t much matter. Most don’t have that luxury.
