Mathematics

Ayden Erickson

13 July, 02:49

At age 70, Fiona lives alone, owns a house valued at $350,000, and has paid off the mortgage completely. Fiona has no other assets to live on. She can choose a reverse mortgage that gives her payments of $32,000 a year for 10 years or one that pays her $20,000 a year for as long as she lives in the house. Fiona opts for the $32,000-a-year reverse mortgage. Did Fiona do the right thing, considering that women of her age live 14 more years on average?

A~ Yes, because she can live rent-free for 10 years and receives a larger income for those years.

B~ Yes, because she gets value out of the house in a form she can use.

C~ No, because she may be unable to live in the house that long or if she lives longer, she will be broke.

D~ No, because reverse mortgages only make sense for people under 50 years old.