Demand Increases For Reverse Mortgages

1/26/2009

posted by N. Sioris

Stumble It!

The Wall Street Journal reported that the demand for reverse mortgages has climbed as the credit crisis worsens. More senior homeowners are turning to federally insured reverse mortgages in order to access home equity and, in some cases, to prevent foreclosure.

As credit tightened and retirement savings plunged during 2008 the demand for reverse mortgages grew significantly. The trend is expected to continue as baby boomers with inadequate savings will be tapping home equity in order to fund retirement. Gregg McBride, senior financial analyst at Bankrate.com said "The demand for reverse mortgages is increasing by the day."

The Federal Housing Administration (FHA) approved 115,176 HECM reverse mortgage loans in 2008, up 6.4% from calendar year 2007. In addition to the financial crisis having a bearing on the increased numbers of HECM loans being originated, Congress also passed a provision that became effective in November, 2008 which increased the national loan limit to $417,000. The higher loan limit gave a greater incentive to seniors that were interested in this type of loan, because with the higher lending limit they can now access more of their equity.


The Hard Cold Facts:

The average American will spend 18 years in retirement. Only 2% of retirees are independently wealthy. Financial experts estimate that a middle income person needs about 70% of his pre-retirement income to maintain his standard of living. Low income earners need 90% or more. Social Security pays only about 40%.

Click here if you would like a reverse mortgage quote.