For example, a reverse mortgage could be used by middle-aged homeowners to fund a college education or job retraining, provide care for elderly parents, or support a temporary absence from the workplace. One potentially important use for housing equity in this broad perspective is for financing long-term health care insurance. Most studies of the respective roles of public and private funding of long-term care ignore home equity, thereby greatly underestimating the potential role of private financing. An elderly person could use a reverse mortgage to fund the purchase of a prepaid longterm care insurance policy without reducing their current income or depleting their non-housing assets. With public spending for health care placing an increasingly heavy burden on tax payers, this user-funded solution to providing care for an aging population offers an attractive option that should have a major role in the health care policy debate.
Several factors seem to be in place for rapid growth of the reverse mortgage market.
The industry is maturing, products are widely available, both financial advisers and the popular press are providing more information to consumers about reverse mortgages, and aging of the population supports fast growth of potential demand. This emerging market has tremendous potential benefits for both consumers and mortgage lenders. Reverse mortgages can give consumers greater flexibility in financial planning by providing another option for managing assets and financing consumption over an individuals life cycle. They also enhance the liquidity and safety of the housing investment and offer financial security against contingencies such as cash flow disruptions arising from temporary spells of unemployment. For lenders, development of the reverse mortgage market will produce new business opportunities.