Reverse Mortgage Guide

The Seattle Post-Intelligencer, an excellent newspaper, posts items by local bloggers. Tom Layson, writing “Media Money Monkey: Help for Your Finances,” said the following on Friday:

“The raid on retirement savings and the breathless marketing of reverse mortgages has begun. Those two pots of gold represent the last fertile field for the equity strippers. I mixed that metaphor in triplicate.

“The long term damage that can be done by stripping away America’s 401-k and home equity can’t be overstated. Taken to its fullest extent, today’s equity stripping in a recession could lead to tomorrow’s descent into a depression.”

He later adds: “the message is this: Protect your long term equity at all costs. If not tapping your 401-k means defaulting on your zero-down home loan and walking away, do it. If your choice is between paying off credit cards or making a house payment where there is equity to protect -– do it.

“In other words, do your best to avoid tapping your last remaining real assets for any short term need. First of all, chances are the short term need won’t be as bad as the need you’ll face when your assets were supposed to kick-in. Secondly, chances are the solution to your short term problem will only clear a path toward your next short term problem. Our fixes to cash flow issues are structural and have to be addressed that way. Our notion of the consumer society is going to change, and you’re going to see a lot of the window dressing fall away.”

This is provocative stuff — and sobering.

What do you think?

For the full story, see: Ever the optimist

This entry was posted on Monday, July 21st, 2008 at 6:44 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.