Reverse Mortgages Gaining in Popularity
Reverse mortgages are gaining in popularity as older Americans turn to them to supplement dwindling earnings from their retirement accounts. Indeed, reports Golden Gateway Financial in a press release, there has been a substantial increase in the amount of people choosing a reverse mortgage:
According to the Housing and Urban Development (HUD), HECM reverse mortgage volume increased nearly 7,000 loans from calendar year 2007 to calendar year 2008. Similarly, HUD data shows that endorsement volume in March 2009 increased 24 percent from February of 2009, and set a new monthly record at 11,261 endorsements.
“As retirement investments have plunged and work opportunities grow scarce, reverse mortgages have become a valuable retirement planning tool for many older Americans,” said Eric Bachman, founder and CEO of Golden Gateway Financial. “Reverse mortgages are also a powerful way for those facing foreclosure or in financial jeopardy to generate additional cash independent of a credit score or income requirements.”
A reverse mortgage is an interesting arrangement in which the mortgage lender pays someone with equity in their home. It is still a loan, however, and comes with fees and interest. The loan is usually paid back with proceeds from the sale of the property, although if the owner moves out and no longer uses the home as a primary residence the loan can come do as well. There are no income and no credit requirements with a reverse mortgage. However, it is important that you carefully review the paperwork that goes along with a reverse mortgage. Make sure that the mortgage lender can’t take anything more than what the home sells for.
Also realize that a reverse mortgage is not for everyone. While it can be very helpful in some cases, a reverse mortgage does take equity out of the home, and can come with extremely high fees. Make sure that your do homework and that you consult with a trusted adviser before deciding on a reverse mortgage.
May 9th, 2009 at 11:50 am
[…] mortgage. If you have equity in your home, especially if you have your home paid off, you can get a reverse mortgage. The bank gives you a chunk of money (or makes payments to you). The loan is usually paid back when […]
May 13th, 2009 at 7:33 pm
[…] mortgage. If you have equity in your home, especially if you have your home paid off, you can get a reverse mortgage. The bank gives you a chunk of money (or makes payments to you). The loan is usually paid back when […]