Reverse Mortgage Information

The figures are out – American seniors have taken 9,700 reverse mortgages during December 2008. This figure is 21% higher than a comparable period of the previous year.

A reverse mortgage is where part of a home’s equity is bought out by a lender. A senior homeowner needs to be at least 62 years of age to take out a reverse mortgage. A reverse mortgage does not need to be repaid for as long as the senior lives in the same home. The FHA allowed the reverse mortgage limit to boost up to $417,000 through a legislation passed in November 2008. This has resulted in more seniors taking reverse mortgages to supplement their dwindling incomes during old age.

Seniors who relied on the stock market to generate good incomes during the retirement ages are beginning to experience loss of incomes and loss of assets, and depreciation in stock values. They are increasingly seeing reverse mortgages as potentially viable alternatives for funding their living.

Reverse mortgage origination’s have always been booming in the recent years. The lenders’ origination costs for a reverse mortgage can be nearly $6,000, plus there are other fees.

New retirees take a reverse mortgage to pay off their existing mortgage balance. They no longer have to make payments for their regular mortgage, and can still continue inhabiting the same house. Thus the money that was going out in regular monthly mortgage payments is now available to be put out for other uses.

Seniors need to be aware that their homes will be possessed by the lenders, in the event of their deaths. Thus their children cannot claim the properties as inheritance. But the children of these seniors are already well established in their own finances, and they stand on their own legs. So it is less of an obligation on the part of these seniors.

The housing market is still down in the trenches, and the stock market has proven very unpredictable and risky. In this scenario, many senior American people are looking to take out reverse mortgages. And it seems they are rightly justified in doing so.