With Reverse Loans does popular equal good?

Posted by charles dennis

June 7, 2007

Tom Kelly from the Daily Herald examines the gigantic growth of the reverse mortgage industry and the arrival of several large banks in recent months. There is no doubt that the rise of boomers coming into retirement age will help to ignite the industry, but to what extent is this vehicle the best option for those in need of cash today? It would seem as though the entire idea behind a reverse mortgage is that a senior will no longer have sufficient income and therefore additional boost will be needed. This is not always the case, I’d venture to say a significant size of boomers will have no need for a reverse mortgage, as their incomes are still increasing with no signs of a need of more income at all. I do like the article find a snippet below:

Fixed-rate mortgages had been absent from the reverse mortgage scene for more than decade until earlier this year. In the past, lenders relied primarily on adjustable-rate mortgages insured by the U.S. Department of Housing and Urban Development. These mortgages, known as Home Equity Conversion Mortgages, account for nearly 85 percent of the reverse market. The HECM program has insured more than 240,000 reverse mortgages since 1990, while private “jumbo” reverse plans also have been available.

A reverse mortgage on a second home could be an appealing alternative for an individual or couple wanting to keep a family vacation home a few more years. Often, the parents would like to leave a cabin or getaway to their children yet need the equity from the cabin for their retirement years. Full Article