What is Reverse Mortgage?

A reverse mortgage is a type of home loan that lets you convert a portion of the equity in your house into cash.
With regular mortgages, borrowers make monthly payments to pay down the debt. With reverse mortgages, lenders pay borrowers and the debt increases over time. The loan isn’t settled until the borrower sells their home, moves out or dies.
The loan is then repaid or the home is sold to pay off the debt.
Owners must pay the property taxes and insurance costs and keep the house in good condition when they agree to a reverse mortgage. If they don’t – and many have fallen into that trap – the lender can foreclose.
Most reverse mortgages are insured by the Federal Housing Administration under a program known as the Home Equity Conversion Mortgage, or HECM.
The first reverse mortgage was written 1961 when Deering Savings & Loan in Portland, Maine, designed one to help a widow stay in her home after her husband’s death.
The program really took off in 1988 when Congress passed a bill giving the FHA authority to insure the loans. Activity peaked in 2008 with 115,000 loans, and then the Great Recession cut that annual number almost in half.

The past few years have seen a turnaround. Reverse mortgages still only account for 1% of the $11.5 trillion in U.S. mortgages. But the number of eligible applicants – people over 62 – is expected to go from 46 million now to 98 million in 2060, according to 2017 statistics from the Department of Health and Human Services.

What is Reverse Mortgage? from Robert Jackme on Vimeo.
Location: United States

Comments

Post a Comment

Popular posts from this blog

How does a reverse mortgage work?

Reverse mortgage is a loan made by a lender to a homeowner using the home as security or collateral. With a traditional mortgage, the homeowner uses their income to pay down the debt over time. However, with a  reverse mortgage the loan balance grows over time  because the homeowner is not making monthly mortgage payments. A reverse mortgage loan typically does not require repayment for as long as the borrower(s) continues to live in the home as the primary residence, pays property taxes and insurance, and maintains the home according to the Federal Housing Administration (FHA) requirements or until the last homeowner has passed away or has moved out of the property. The amount of equity you can access with a reverse mortgage is determined by the age of the youngest borrower, current interest rates, and the value of the home. Please note that you may need to set aside additional funds from loan proceeds to pay for taxes and insurance. Source:
Read more

Conventional Mortgage Origination Drop!

Image
The title of my blog post today is not necessarily a big surprise. But the magnitude of this drop may be surprising to you. My chart below shows the monthly Conventional loan origination (Purchase and Refinance combined) from January 2009 to April 2010.  When comparing January 2009 to January 2010, you can really see how drastic the drop has been in Conventional loan origination . In January 2009, there was 389,460 Conventional loans as compared with January 2010 at 260,326 loans. See the chart below. We will monitor this and see what happens over the summer. Credit:  Conventional Mortgage Origination Drop!
Read more

Shopping for a Reverse Mortgage

Image
If you’re considering a reverse mortgage, shop around. Decide which type of reverse mortgage might be right for you. That might depend on what you want to do with the money. Compare the options, terms, and fees from various lenders. Learn as much as you can about reverse mortgages before you talk to a counselor or lender . And ask lots of questions to make sure a reverse mortgage could work for you – and that you’re getting the right kind for you. Here are some things to consider: Do you want a reverse mortgage to pay for home repairs or property taxes? If so, find out if you qualify for any low-cost single purpose loans in your area. Staff at your local Area Agency on Aging may know about the programs in your area. Find the nearest agency on aging at eldercare.gov, or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and how to apply. Do you live in a higher-valued home?...
Read more