A reverse mortgage loan may be worth considering for retirees in certain situations, but it should also be weighed against the potential pros and cons based on a senior’s current situation. That came out from a column published this week on The Motley Fool.
“There are certain requirements that you must meet in order to qualify for a reverse mortgage such as: B. Be at least 62 years old and apply for a house that will be your primary residence, ”the column says. “You also need to keep track of your property taxes, homeowner insurance premiums, and any other ongoing expenses for which you are responsible, such as HOA fees.”
Increased loan production could contribute to increased interest in the Home Equity Conversion Mortgage (HECM) product category, the article said, and according to Steve Irwin, president of the National Reverse Mortgage Lenders Association (NRMLA).
“We saw the volume of reverse mortgages grow 34% year over year to over 43,000 loans in 2020, and we expect a similar increase in production in 2021,” Irwin told the publication.
However, recent federal government data also shows that up to half of reverse mortgage loan production in FY 2021 came from HECM-to-HECM refinance transactions, skewing the number of new borrowers served by the industry. However, the decision to take out a reverse mortgage is a personal decision and should be made in consultation with trusted counselors who know how a reverse mortgage can affect a prospective borrower’s current financial situation.
“American Pensioners” […] have identified the survival of their savings and investments as one of their greatest fears in retirement, ”Irwin told the publication. That fact, coupled with recent highs in senior home ownership rates, could be an opportune time to consider a reverse mortgage.
Still, the usual considerations on the negative side apply: a borrower needs to be sure that he can maintain the house according to FHA standards and pay property taxes and home insurance on time.
“As America’s population ages, reverse mortgages have become an increasingly important option for meeting future health needs, meeting the daily cost of living, and being used strategically as part of a comprehensive retirement plan,” Irwin tells the Motley Fool.
This could make a reverse mortgage a viable option for a retiree, as long as the prospective borrower does the appropriate research to fully understand the potential impact of such a loan on him and his financial plans now and in the future.
Read the column by the Motley Fool.