With pensions becoming obselete and the volatility of the stock market, many older americans have much less income during their golden years than they ever expected. Add to that the rising cost of living and those on fixed retirement incomes are feeling the squeeze all too often.
Fortunately, there is a great financial tool that many homeowners can use to supplement their retirement income. The reverse mortgage is becoming more and more popular and is also becoming easier to obtain. Read the following article for more insight into this growing trend.
The Age of Reverse Mortgages, which I wrote about in April, is here. We can credit a new form of reverse mortgage, the Saver Home Equity Conversion Mortgage, for getting the ball rolling. The Saver reduces the front-end mortgage insurance costs by lowering the credit limit for the mortgage.
How could a small change open a floodgate of interest?
Simple. First, it’s not such a small change. Second, millions of retired homeowners are looking for ways to increase their retirement income.
As a practical matter, I don’t see the cost reduction is that big a deal. Using an online calculator, I found that a reverse mortgage on a $250,000 house would cost $11,626 in fees for the earlier form and $8,151 for the new Saver form. To learn more, visit the HUD website.
What is happening is that reverse mortgages are becoming a financial planning tool rather than an emergency loan service. John Mitchell, CEO of Reverse Mortgage of Texas, characterized the change this way:
“Nine out of 10 borrowers take the full lump sum when they take out a reverse mortgage. One reason is that most borrowers still have a mortgage or a home equity credit line. By the time they have that paid with the (Home Equity Conversion Mortgage), there isn’t much left. But if this changes from a need-based market to a want-based market where people are looking further ahead, it would be different.”
A reverse mortgage can be a new tool for annuitizing wealth, turning the equity in our homes into a lifetime cash income stream. The No. 1 question readers asked after my April column was this:
“Will I have any home value left when I leave the house or die? I’m really hoping to leave the money in it to my kids.”
Read the rest of the article by clicking the following link:
The reverse mortgage is a great option for homeowners with equity in their homes. And the process doesn’t have to be over-complicated, either. If you’d like to learn more about reverse mortgages and how they might be a good fit for you, contact one of the finance specialists at SLS Mortgage (540) 216-0665 or visit http://homeloansculpeperva.com/reverse-mortgage-culpeper-va/