A Primer on Reverse Mortgages

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Housing equity is the most important asset for the vast majority of Americans. In principle, this asset might be used to support consumption in retirement. Reverse mortgages were envisioned as a mechanism that would allow older people to consume their housing equity without selling their homes. Yet this market is extremely small — less than one percent of qualified homeowners have a reverse mortgage. This brief provides an overview of reverse mortgages and explores possible reasons for their currently limited appeal…