Reverse mortgages have a bad reputation in some circles, but they can be very useful tools for seniors looking to take advantage of equity in their homes–including using that equity to purchase a new home.
Bernie Komer has a good article on the basics of using an FHA Home Equity Conversion Mortgage (or HECM)–a type of reverse mortgage–to allow a senior who has equity in one property but wants to move to another property (to relocate to be with family, for example, or just to downsize) to do so without having to sell the first property. His analysis is pretty accurate, with one major mistake that I can see: he describes this as a new option for seniors, but it’s really just this particular flavor that’s relatively new–at Ethical Homes and HomeFirst Mortgage Corp, we’ve been using different versions of the “reverse for purchase” scenario to help seniors since 2008.
Interested in learning more about reverse mortgages and how they might help you or your loved ones? Contact us and we’d be glad to have one of our reverse mortgage specialists review your scenario with you and see if a reverse mortgage might make sense.
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Justin
on Jul 18th, 2009
@ 9:18 pm:
Did you see the recent GAO product on this topic? http://gao.gov/products/GAO-09-606
sweth
on Jul 19th, 2009
@ 2:38 am:
I didn’t; thanks for the pointer. As they note, reverse mortgages are complex, and thus very prone to abuse by unscrupulous brokers. I’m a little confused, though; is it just me, or is the GAO’s entire action plan “we aren’t going to recommend anything until we see what everyone else decides to do”?
Justin
on Jul 20th, 2009
@ 8:38 am:
They give some recommendations but are waiting to assess the efficacy once they learn exactly how those recommendations are addressed and implemented.