Friday, February 24, 2006

Charge it to the McGee Avenue account, please.

So.... what do these people do when their local housing market goes from boom to bust?

1 comment:

Uncle Roger said...

Once they have the reverse mortgage, it doesn't matter at all what the housing market does. Basically, a bank (or other entity) decides how long they'll have to wait to get the house (until the owners die) and how much it will be worth then. They then pay the owners the current value of that amount.

That is, if the owners will likely live 10 years and the house will be worth $1m at that time, then the owners would get something like $500k (the amount you would need to invest to have $1m in 10 years.) A good idea, in some few cases, I suppose.