In his column for the Wall Street Journal, Professor Benjamin Harris urged retirees to consider reverse mortgage loans as a way to fund their retirement. Harris breaks his reasoning down into two specific protections. The first is a cushion against falling home prices and the second is the likelihood of a senior outliving their assets.
In addition to these protections, Harris also championed the nonrecourse feature that prevents a senior from owing more than the home's value.
"This nonrecourse feature is potentially worth a lot to homeowners, especially if they use it exclusively as protection against a falling value of a home," Harris writes, according to Reverse Mortgage Daily.
"Under [a] ‘ruthless’ strategy (as economists have dubbed it), borrowers initiate a mortgage, but don’t actually borrow any money unless the value of their home falls. This way, borrowers only pay a few thousand in up-front fees, but cash in if their home’s value falls."
Later on in his report, Harris did outline a few caveats, though, his overall sentiment towards reverse mortgages were indeed positive.
To learn more about Harris' reasoning for why seniors should consider reverse mortgages as a way to fund retirement, click on the image above.