Popularity of Reverse Mortgages
- Posted by admin on July 6th, 2007 filed in Reverse Mortgage Info
Question: Are reverse mortgages becoming more popular?
Answer: Yes, more seniors than ever before are signing up for a reverse mortgage. New data from the Department of Housing and Urban Development (HUD) reveals that more than 300,000 seniors have used the federally-insured Home Equity Conversion Mortgage (reverse mortgage) program to generate cash without the necessity of selling or leaving their home.
More than 76,000 seniors obtained a reverse mortgage through HUD last year, compared with only 6,637 in year 2000.
Insured by HUD’s Federal Housing Administration, these reverse mortgage loans require the borrower to be age 62 or older, own their home, and must live in the home. Reverse mortgage borrowers are also required to participate in HUD-approved housing counseling programs before obtaining the loan.
Understanding all aspects of an offered reverse mortgage is vitally important. These special loans carry risks and other downsides, such as substantial upfront fees. Those fees can be rolled into the loan, as the salesman will quickly point out. But when it becomes due and payable the full amount of fees plus the additional accrued interest must be paid.
Interested seniors should discuss it with a knowledgeable person who has no financial interest in the transaction before making a decision.
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July 7th, 2007 at 4:07 pm
RM’s are a great way for seniors to tap into the equity they have built up and have a quality of life. While there are several “jumbo” products out there that are not FHA insured, the HECM is still safe, and yes the fees are higher than a conventional loan. However, if you plan on living in the home for at least 5 years, this makes sense. I have personally put my grandparents into a reverse and paid off an existing mortgage, freeing them up 1200.00 per month. That is huge for someone on a fixed income. There is a lot of new information out there and as a result, there is bound to be inaccurate information floating around. For FACTS, not opinions, call me or visit my website. www.sdseniortransitions.com.
These are also a great way for those of us in the “sandwich generation” to help our parents become and stay financially independent and be able to afford things like home care or home modifications if necessary, taking some of the load off of us so we can focus on raising our kids and saving for our own retirement.