Reverse Mortgages Purchase Loans Opens Options in Real Estate Investment
The new HUD reverse mortgage loan program for purchases has opened up a number of real estate buying options for investors. Seniors can now purchase properties and real estate with a reverse mortgage loan. While it is mandatory that the senior resides in the property it is still possible to use this new FHA insured HCEM purchase loans to buy properties having up to two, three or more units. The options now open however raises some questions as regard reverse mortgage purchase loans and real estate investment.
One of such questions and probably the most fundamental is whether it makes any form of economic sense to be buying any real estate property in the first place. With the steady decline in the value of real estate property since the preceding year the real estate market is not looking it’s most attractive in 2009 as there are no guaranties that the prices would not drop further. One of the reasons for this is the high number of people who lost their jobs and of those who are unemployed. Home value hardly appreciates when a large number of people have no income. Effective demand drops and so does the price.
However it is important to note that this decline in home value does not affect all areas. The National Association of Realtors says 28 our of the total 152 metropolitan statistical areas indeed showed increase in the average price of single family homes. Another 4 out of the 152 remained unchanged and unaffected by the decline.
A supporting factor why a senior may yet consider opting for a real estate with two or more living units with a reverse mortgage purchase loan is the issue of income. Home value prices may have gone down but the same cannot be said of rental rate. Rental rates held their value in most places while it actually rose in some limited quarters. If rent rate did fall it was in a very limited scale.
So seniors may begin to consider the possible option of buying a real estate property now that it cost less and then be able to generate stable income from rental rates with a possibility of even an increase in rental rates in the future.
Of course this conclusion may not necessarily apply to all seniors wherever they may be so it is important that when considering this idea that you speak with your local investors and brokers to determine if it would pay off in your particular market area. If you area for example is not one with a high population of would-be-renters then this idea wont be feasible.
Also remember that renters would be neighbors and would add to your responsibility. So deciding to have renters would certainly need you to consider some issues of privacy and managerial responsibility. You have to weigh a number of factors to see if you can and do want to be in the rental business as there is a lot involved more than just collecting rent.
With all this mentioned, the fact still remains that the new HUD reverse mortgage purchase loans does opens a door of investment options for seniors. With the economy crunch biting harder while it still remains unclear when things may turn around for the better, seniors do need all the options they get. For more information and advice, please speak with a reverse mortgage lender.
