Future 2nd Mortgage

There have been requests for adding a reverse mortgage component to ESP, which is probably a pretty complex undertaking. But its impact could be approximated by simply providing for future 2nd mortgages.

For planning purposes the real question is simply what is the impact of tapping the growing home equity in some way. At some point the typical aging long-term homeowner following ESP recommendations will likely find most of his/her assets tied up in home equity, so whether (not how) to convert that to consumption at some point becomes significant. A future 2nd morgage to extract equity would be a simple way for ESP to model that.

The details of what you actually do (sell the house, reverse mortgage it, rent it, etc) are really secondary considerations. The finance industry wll probably address it with some future novel products as more and more people are faced with the issue. Meanwhile, ESP could provide a simple way to plan for that day.