When it comes to personal finances, Americans are infamous. We spend money like it is going out of style, grows on trees and so on. The flip side of this, of course, is we are renowned for saving next to nothing. In fact, one of the big concerns of economists and the government is what is going to happen when we get older and have no money to live on. This is why IRA, 401(k) and other retirement vehicles are made so attractive by the government. They are trying to force us to save money and rightly so. Still, the statistics show most Americans do not.
If you are considering buying a house, there are lots of reasons to do so. Common reasons include the pride of ownership, the tax deductions that you can pick up from mortgage interest and so on. The fact property is a good long term investment is also touted. The statistics are clear. Property appreciates over time. At the same time, you should be paying down your mortgage debt. Combined, these two actions inevitably result in your living in a property that acts as a sort of savings account.
As is typical with capitalism, the very nature of this savings system is starting to bear new services as baby boomers grow older. In this case, we are talking about the reverse mortgage products flooding the market. Reverse mortgages essentially allow you to cash out of your house while still living in it. Whereas you pay a lender with a traditional mortgage, the process is flipped around with a reverse mortgage as a lender pays you in exchange for chunks of your house equity. Some people are comfortable with this while others are not. What is undisputed, however, is this product only exists because houses are the de facto savings accounts of most people.
As you get older, you are going to want to retire. How can you do that if you haven't planned for it by saving money during your peak work years? The only way is to buy a house and invest in your future.
