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Everything you always wanted to know about reverse mortgages but were afraid to ask

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  • Makoto Nakajima

Abstract

Most people have probably heard of reverse mortgage loans. But even though these loans have been getting more attention lately, it?s possible that many people still aren?t sure about what reverse mortgages really are. This is not surprising, since reverse mortgages are a relatively new type of mortgage loan. Although reverse mortgages are currently used by only a small fraction of people, their popularity has been growing in recent years. In this article, Makoto Nakajima discusses reverse mortgage loans, particularly the most popular type, which is administered by the government. He discusses who uses reverse mortgage loans and how they are used and compares the pros and cons of these mortgages.

Suggested Citation

  • Makoto Nakajima, 2012. "Everything you always wanted to know about reverse mortgages but were afraid to ask," Business Review, Federal Reserve Bank of Philadelphia, issue Q1, pages 19-31.
    • Handle: RePEc:fip:fedpbr:y:2012:i:q1:p:19-31
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/2012/q1/brq112_everything-you-always-wanted-to-know-about-reverse-mortgages.pdf
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    References listed on IDEAS

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    1. Sally R. Merrill & Meryl Finkel & Nandinee K. Kutty, 1994. "Potential Beneficiaries from Reverse Mortgage Products for Elderly Homeowners: An Analysis of American Housing Survey Data," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 22(2), pages 257-299, June.
    2. Steven F. Venti & David A. Wise, 2004. "Aging and Housing Equity: Another Look," NBER Chapters, in: Perspectives on the Economics of Aging, pages 127-180, National Bureau of Economic Research, Inc.
    3. Hui Shan, 2011. "Reversing the Trend: The Recent Expansion of the Reverse Mortgage Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(4), pages 743-768, December.
    4. Mariacristina De Nardi & Eric French & John B. Jones, 2010. "Why Do the Elderly Save? The Role of Medical Expenses," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 39-75, February.
    5. Hurd, Michael D, 1989. "Mortality Risk and Bequests," Econometrica, Econometric Society, vol. 57(4), pages 779-813, July.
    6. Irina Telyukova & Makoto Nakajima, 2010. "Home Equity Withdrawal in Retirement," 2010 Meeting Papers 636, Society for Economic Dynamics.
    7. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    8. David A. Wise, 2004. "Perspectives on the Economics of Aging," NBER Books, National Bureau of Economic Research, Inc, number wise04-1.
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    Cited by:

    1. Fang, H., 2016. "Insurance Markets for the Elderly," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 237-309, Elsevier.
    2. Makoto Nakajima & Irina A. Telyukova, 2017. "Reverse Mortgage Loans: A Quantitative Analysis," Journal of Finance, American Finance Association, vol. 72(2), pages 911-950, April.

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    Keywords

    Mortgage loans; Reverse;

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