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dc.creatorHambel, Christoph
dc.creatorKraft, Holger
dc.creatorMeyer-Wehmann, André
dc.date.accessioned2021-09-28T09:41:26Z
dc.date.available2021-09-28T09:41:26Z
dc.date.issued2020-10-28
dc.identifier.urihttps://fif.hebis.de/xmlui/handle/123456789/2399
dc.description.abstractThis paper studies a household’s optimal demand for a reverse mortgage. These contracts allow homeowners to tap their home equity to finance consumption needs. In stylized frameworks, we show that the decision to enter a reverse mortgage is mainly driven by the differential between the aggregate appreciation of the house price and principal limiting factor on the one hand and the funding costs of a household on the other hand. We also study a rich life-cycle model that can explain the low demand for reverse mortgages as observed in US data. In this model, we analyze the optimal response of a household that is confronted with a health shock or financial disaster. If an agent suffers from an unexpected health shock, she reduces the risky portfolio share and is more likely to enter a reverse mortgage. On the other hand, if there is a large drop in the stock market, she keeps the risky portfolio share almost constant by buying additional shares of stock. Besides, the probability to take out a reverse mortgage is hardly affected.
dc.rightsAttribution-ShareAlike 4.0 International
dc.rights.urihttp://creativecommons.org/licenses/by-sa/4.0/
dc.subjectHousehold Finance
dc.titleWhen Should Retirees Tap Their Home Equity?
dc.typeWorking Paper
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1432?HUD
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1420?FRED
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/2048?USCS
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1622?Damodaran
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1489?SCF
dcterms.referenceshttps://fif.hebis.de/xmlui/handle/123456789/1356?BLS
dc.source.filename293_SSRN-id3720645
dc.identifier.safeno293
dc.subject.keywordsreverse mortgage
dc.subject.keywordsconsumption-portfolio decisions
dc.subject.keywordsoptimal stopping
dc.subject.keywordsbiometric risks
dc.subject.keywordsfinancial disasters
dc.subject.jelD14
dc.subject.jelE21
dc.subject.jelG11
dc.subject.jelG21
dc.subject.jelJ14
dc.subject.jelR21
dc.subject.topic1reverse
dc.subject.topic1constraint
dc.subject.topic1realValued
dc.subject.topic2cocco
dc.subject.topic2market
dc.subject.topic2agent
dc.subject.topic3rightHand
dc.subject.topic3extend
dc.subject.topic3median
dc.subject.topic1nameConsumption
dc.subject.topic2nameMonetary Policy
dc.subject.topic3nameHousehold Finance
dc.identifier.doi10.2139/ssrn.3720645


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Attribution-ShareAlike 4.0 International
Except where otherwise noted, this item's license is described as Attribution-ShareAlike 4.0 International