Reverse
mortgages have always been controversial. But, it’s starting to get more
approval from financial planners as retirement crisis continue to haunt
seniors. Although some planners are still sceptical, others are starting to
consider home equity as a good way for their clients who have found it
difficult to save or add on to their retirement income.
Reverse mortgages were once considered as the Wild West of
the mortgage sector, they have observed their reputation improve as the Federal Housing Administration tightened their lending standards. More experts are now
saying that reverse mortgages could be a wonderful tool for retirees.
Gaining Acceptance
When they were first introduced, reverse mortgages got a
negative publicity because of their brokers who were overly aggressive. Many of
them gained a lot of commissions on loans on seniors who are not financially
sophisticated.
The lowest point came after the Great Recession
wherein 10% of all reverse mortgage loans fell into default.
The Federal Housing Administration is responsible for
insuring reverse mortgages. It responded by tightening up the requirements for homeowners
who are looking to make the most out of the Home Equity Conversion Mortgage program.
The reforms restricted the amount of home
equity that a homeowner could take out during the first year to 60%,
getting rid of the temptation of a sudden and single windfall.
The FHA made the credit standards tighter. Homeowners with
finances weren’t up to par could be needed to put cash aside in their escrow
account in order to cover their future expenses.
To qualify for a reverse mortgage loan, you have to be at
least 62 years old and have significant home equity, and the ability to cover
the home repair, taxes, and insurance costs.
Reverse mortgages could offer extra retirement income, which is a much more affordable replacement for long term care
insurance. It will also help seniors put off spending their social security, so
they could get a higher payment every month by delaying retirement.
For individuals who for some reason were unable to save
enough for their retirement, tapping into their biggest home equity could be a
live saver.
Together with the lump sum, other reverse mortgage options
involve taking out a line of credit or receiving monthly annuity, an option
that received the most approval from financial planners.
Some planners are optimistic in a reverse mortgage line of
credit, which could grow as much as 3% to 4% annually.
Obviously, if you use the line of credit, the money you get
will not grow anymore and will just begin to accrue interest.
However, whether it is via a reverse mortgage lump sum or
credit line, it could be very helpful to get another income source to draw
upon, according to some planners.
Taking out reverse
mortgage loan, can greatly help. Say for example you’ve made investments,
you have cash, and you have home equity, you can tap into any of them depending
on the market conditions.
Call Reverse Mortgage Specialist if you would like to know more about
reverse mortgage.
David Stacey
Reverse Mortgage Specialist
Greenville, SC 29607
864 920 2733
http://reversemortgagegreenvillesc.com/
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