Reverse Mortgages: Are Seniors Being Driven By The Obama Economy?
One of our readers asked if the recent popularity in reverse mortgages among seniors is being driven by the Obama recession. We couldn't help ourselves. The questions surrounding these mortgages intrigued us and we can only assume that it might intrigue the readers are well. Are the trends in reverse mortgages just one more sign of the desperation that has been wrought by the failling Obama economy? Are they a desperation move? Are they wise?
The following offering from seniorjournal.com should provide some food for thought.
(SeniorJournal.com) June 1, 2012 - The reverse mortgage has gained new respectability – well-known newspaper columnist Scott Burns, a highly respected guru on financial matters concerning senior citizens, has just released an article with the title, “Reverse Mortgages: Their Time Has Come.” What is called a reverse mortgage is technically a Home Equity Conversion Mortgage (HECM), the U.S. Department of Housing and Urban Development program that was designed for senior citizens in 1987.
Consumer Reports explains, “Reverse mortgages let homeowners at least 62 years old use their home equity to take out a payment-free loan. The lending bank does not pay the homeowner based on income, but rather on age, property value, and loan interest rate. Generally, the older you are, the higher the value of your home, and the lower the interest rate, the more money you can borrow. The bank gets its money back when you die or permanently move out and the home can be sold.”
But these unusual lending products have not been popular with everyone. Last year the two biggest banks making the loans, Wells Fargo and Bank of America, pulled out of the of the market. The two had been providing over 40 percent of these loans in the U.S. Most analysts say the banks were struggling with seniors not paying the taxes and insurance on their homes and could not deal with calling in the loans of these elderly borrowers.
But, columnist Burns and others see brighter days ahead.
Read The Full Story
The following offering from seniorjournal.com should provide some food for thought.
(SeniorJournal.com) June 1, 2012 - The reverse mortgage has gained new respectability – well-known newspaper columnist Scott Burns, a highly respected guru on financial matters concerning senior citizens, has just released an article with the title, “Reverse Mortgages: Their Time Has Come.” What is called a reverse mortgage is technically a Home Equity Conversion Mortgage (HECM), the U.S. Department of Housing and Urban Development program that was designed for senior citizens in 1987.
Consumer Reports explains, “Reverse mortgages let homeowners at least 62 years old use their home equity to take out a payment-free loan. The lending bank does not pay the homeowner based on income, but rather on age, property value, and loan interest rate. Generally, the older you are, the higher the value of your home, and the lower the interest rate, the more money you can borrow. The bank gets its money back when you die or permanently move out and the home can be sold.”
But these unusual lending products have not been popular with everyone. Last year the two biggest banks making the loans, Wells Fargo and Bank of America, pulled out of the of the market. The two had been providing over 40 percent of these loans in the U.S. Most analysts say the banks were struggling with seniors not paying the taxes and insurance on their homes and could not deal with calling in the loans of these elderly borrowers.
But, columnist Burns and others see brighter days ahead.
Read The Full Story
As a real estate appraiser I am saddened when I am asked to appraise a home for a senior citizen applying for a 'reverse mortage' because most of them are ill informed and do not appear to understand the circumstances of what they are doing with what is often their most valuable asset.
ReplyDeleteYes, we'd like to hear. Have you considered a lengthy article on the topic. We'd love to publish it and give you a by-line (if you wish).
DeleteDear Anonymous - - Please give us the pitfalls that you simply alude to in your reply. Give us details and substance...not real estate gibberish. Thanks. Regards...Tom
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