Reverse Mortgage

A reverse mortgage allows a senior citizen to receive funds that are based on the equity value of their home. In other words, a reverse mortgage allows a person to borrow against their home equity. In the United States, a person must be at least 62 years of age to initiate a reverse mortgage, and there are minimum requirements for the level home equity. The funds are provided by a lending institution and can be in the form of periodic income payments or a lump sum. In 2009, Congress increased the maximum home value that can be borrowed against to $625,000 from $417,000. Almost all reverse mortgages are backed or insured by the Federal Housing Administration (FHA). A primary residence is a meaningful portion of the net worth of many senior citizens. As a result, a reverse mortgage can play a very important role in financial planning because it allows seniors to derive income from a significant but largely illiquid asset.

What You Need to Know About Reverse Mortgages

Writing for The Chicago Tribune, Terry Savage has written the best reverse mortgage article I have come across. The article is professional, objective and comprehensively covers all of the basics: What are the benefits of a reverse mortgage? How does a reverse mortgage work? Some concrete examples. The downsides of a reverse mortgage. Where to go and who to talk to about reverse mortgages. It is a great article and starting point for anyone considering a reverse mortgage. Source: Chicago...

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Reverse Mortgage

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Reverse Mortgage

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New Rules Allow Use of Reverse Mortgages for Purchase of Principal Residence

New guidelines allowing older borrowers to use a reverse mortgage to purchase a principal residence went into effect earlier this year. Previous guidelines had restricted the use of reverse mortgages to real estate transactions that involved refinancing. Until recently, lenders had been waiting on the sidelines in anticipation of further clarification from the federal government. However, lending activity does appear to be picking-up. A recent New York Times article provides specific examples...

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Reverse Mortgages Receiving More Attention

A recent Wall Street Journal article indicates that the number of government-backed reverse mortgages has increased 20% from the same period last year. This stands in contrast to the number of new home equity loans which decreased 70% from the same period last year. The increased interest in reverse mortgages is directly related to the fall-out from the financial crisis. Seniors who have suffered as a result of decreasing asset values in the capital markets see home equity as a potentially...

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Reverse Mortgages -- A Source of Income in the Wake of the Financial Crisis?

Do reverse mortgages deserve a second look in light of the financial crisis? Similar in some ways to annuities, reverse mortgages have received little attention from conventional financial planners and investment advisors. Part of this reluctance involves lack of familiarity with the products, part of it involves lack of financial incentives to discuss the products, and part involves genuine, well-founded skepticism regarding product value. The reality, though, is that home equity is a major...

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MetLife Providing Banking and Mortgage Services

MetLife is making acquisitions so that the company is able to provide products and services that range beyond life insurance and annuities. In 2008, MetLife acquired two companies that provide mortgage-related services. One of these companies--Everbank Reverse Mortgage--is involved in the reverse mortgage business. MetLife, which technically is a bank holding company, seeks to create multiple product relationships with customers that either complement or augment their core life and annuity...

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