Baby Boomers Reaching Retirement

Home equity conversion mortgages, or reverse mortgages have increased as more Americans have reached age 62. Although some private banks have begun to allow reverse mortgages as early as age 60, most still require that both applicants be age 62 or older. The government will only insure these loans when both borrowers are at least age 62. Uninsured loans will likely be more expensive.

Many banks understand that as interest in these products increase, so can their profits. These types of loans are more lucrative and generally carry much less risk for the lender.

Private Sector Expansion

Reverse mortgages were actually created by the Department of Housing and Urban Development (HUD). In the last couple of years, several big banks began getting in on the action.

One bank that jumped into the game head first was Bank of America. Today, they provide reverse mortgages in a number of states, and they are expected to expand into more markets.

Other banks are also following suit. They see an opportunity to cash in on the equity that Seniors have built.

Risk vs. Reward

Reverse mortgages provide lenders with a more diverse loan pool. It is likely that reverse mortgages will prove to be just as profitable or more so than conventional mortgage sales, and with a lower risk factor.

Since reverse mortgages are a relatively new phenomenon, it may take a number of years to truly measure their value to lenders. For instance, some homeowners that buy a reverse mortgage may potentially still live in their homes for 30-40 years. It could take decades to get accurate data on their cost.

Still though, there is evidence that reverse mortgages are a better value for lenders, hence the increased interest in providing these products. Competition is also heating up, with many lenders hinting that they will be able to reduce the roughly 5 basis points charged up-front.

This is good news for Seniors that are considering a reverse mortgage. Lower costs could leave more of their equity available to cash out.

One of the biggest schemes involves steering consumers into inappropriate loans. In some cases, mortgage brokers have even worked with insurance sales agents without full disclosure. Homeowners may be agreeing to bad loans and even annuities that they are unaware of.

Homeowners seeking to reclaim equity through a reverse mortgage are encouraged to meet with a reverse mortgage counselor. The U.S. Department of Housing and Urban Development (HUD) approves community nonprofit agencies for housing counseling.

HUD-approved housing counseling agencies can help you evaluate your needs to see if you even need a reverse mortgage. Then they can help you evaluate certain loan products to make sure that you are getting the best possible plan.

Don’t let yourself fall victim to scam artists that seek to steal your most valuable possession. Instead, insist on learning about reverse mortgages through your HUD-approved reverse mortgage counselor.

Reverse mortgage counselors can give you the certificate you need to pursue a reverse mortgage. They can also give you the knowledge to make the best choice.

HUD-approved reverse mortgage counseling is available for free or minimal cost. You may find a HUD-approved housing counselor by calling (800) 569-4287.

Vision Credit is currently applying for HUD certification. Once complete, we will be able to provide the certificates required for a reverse mortgage.

Our housing counselors have already received training for reverse mortgage counseling through the North Carolina Housing Finance Agency. HUD certification will be the next step in process.

Vision Credit shall be included in the list of Certified Reverse Mortgage Counselors upon acceptance of our application. This will allow for us to receive direct referrals from the North Carolina Housing Finance Agency and Resources for Seniors and Volunteer Persons (RSVP).

Please stay posted to find out more about this innovative solution. We will provide additional updates as we near approval.