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about reverse mortgages

Reverse Mortgage Tips

Vera Gibbons spoke with Julie Chen about when is a good time for a reverse mortgage and what to look out for.

HUD Cites Reverse Mortgages As Solution to Senior Housing Stress

“Older populations face numerous housing challenges, including those related to affordability, physical accessibility, and access to medical and other services inside and outside the home,” the publication notes, citing the HECM program as one of the existing options doing its part to offer a solution to those facing challenges.  

“Aging homeowners might also be helped by reverse mortgages that allow owners to access the equity in their home, which in many cases is their largest asset, without having to leave it,” the publication writes. “Most reverse mortgages are insured by the federal government through the Home Equity Conversion Mortgage (HECM) program. Homeowners must be able to pay ongoing maintenance, tax, and insurance costs.”

Further, a forthcoming research initiative would further explore the benefits of reverse mortgages, HUD says. 

“A study of the reverse mortgage market would assess the benefits of the loans for older homeowners by comparing HECM borrowers with nonborrowers in similar financial circumstances,” the publication states. “A related inquiry will examine HECM defaults related to nonpayment of property taxes or homeowners insurance and will compare the tax delinquency and property tax relief program participation of HECM borrowers and similar non borrowers.

New Guidance Releases HECM-for-Purchase Market Handcuffs

But all that disappeared with the release late last month of FHA INFO #17-44, which updated the agency’s FAQ on H4P transactions. 

“Properties are eligible for FHA insurance under the HECM for Purchase program when construction is completed and the property is habitable, as evidenced by the issuance of the ceritficate of occupancy, or its equivalent, by the local jurisdiction,” the notice reads. “The certificate of occupancy is required to be included in the case binder. Mortgagees may obtain the certificate of occupancy at any time prior to submission for endorsement.”

That last sentence changed the H4P landscape in one fell swoop, and could potentially provide a solution for a program that’s always seemed as though it was perpetually on the cusp of gaining popularity. For years, industry players described the transactions as a “ sleeping giant ,” just waiting for the right formula to convince key stakeholders that it’s a good solution for some seniors.

What is the downside of reverse mortgages?

My in-laws are elderly (in their mid and late 80s) and own their home outright. The in home care expenses for my father in law are mounting and reverse mortgaging their home seems to be the answer.

This product has become ever more popular with the aging society. Because of this these loans are changing almost daily. The downside to this type of loan is your house is appreciating after you lock in the payment rate.