Many older, retired households are considered "house poor." Which of the following forms of loans has been designed to help mitigate this problem by offering additional monthly income to these homeowners in exchange for a portion of their housing equity?

Question

Quizplus · Accepted Answer

A reverse mortgage is specifically designed for older homeowners who are house rich but cash poor. It allows them to access the equity in their home by receiving additional monthly income in exchange for a portion of their equity. This can help alleviate financial stress and improve their quality of life. A PMM is a type of mortgage used to finance the purchase of a property and is not relevant to this scenario. A piggyback mortgage is a second mortgage used to avoid mortgage insurance, and a home equity loan is a lump sum loan that allows a homeowner to borrow against the equity in their home. Neither of these options provide additional monthly income to the homeowner in exchange for equity in their home.

Many Older, Retired Households Are Considered "House Poor