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Journal Article
Mortgage for the elderly
Working Paper
Reverse mortgage loans: a quantitative analysis
Reverse mortgage loans (RMLs) allow older homeowners to borrow against housing wealth without moving. In spite of growth in this market, only 2.1% of eligible homeowners had RMLs in 2011. In this paper, we analyze reverse mortgages in a life-cycle model of retirement, calibrated to age-asset profiles. The ex-ante welfare gain from RMLs is sizable at $1,000 per household; ex-post, low-income, low-wealth and poor-health households use them. Bequest motives, nursing-home moving risk, house price risk, and interest and insurance costs all contribute to the low take-up rate. The model predicts ...
Journal Article
Everything you always wanted to know about reverse mortgages but were afraid to ask
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 ...
Working Paper
Reversing the trend: the recent expansion of the reverse mortgage market
Reverse mortgages allow elderly homeowners to tap into their housing wealth without having to sell or move out of their homes. However, very few eligible homeowners have used reverse mortgages to achieve consumption smoothing until recently when the reverse mortgage market in the United States witnessed substantial growth. This paper examines 1989-2007 loan-level reverse mortgage data and presents a number of findings. First, I show that recent reverse mortgage borrowers are significantly different from earlier borrowers in many respects. Second, I find that borrowers who take the ...