While reverse mortgages sometimes make headlines, consumers can rarely find up-to-date information in their favorite newspapers and magazines. To make up for the lack of mainstream news, seniors can get the latest information by following a reverse mortgage blog. For those who have fallen behind on their favorite reverse mortgage blog, here is the latest news that has the mortgage industry buzzing.
Are Financial Experts Finally Realizing the Full Benefits of Reverse Mortgages?
It is no secret that reverse mortgages have many critics. When Home Equity Conversion Mortgages (HECMs) first became available in the late 1980’s, several lenders did adopt some questionable practices. However, as these loans have matured, the Federal Housing Administration (FHA) has tightened their regulations. The days when lenders could take advantage of their borrowers are long since over. Unfortunately, it has taken a long time for the industry to shake its negative reputation.
The good news is that the industry is finally starting to get the recognition it deserves. While these loans are not meant to take the place of traditional retirement planning, many esteemed organizations, including the National Council on Aging, now work to educate seniors on these loans.
As many adults are acutely aware, the recent downturn in the economy has impacted retirees’ assets and made it harder to save for retirement. An article released by Investment News, an online news source for financial planners, reported that “reverse mortgages should be considered as a very valuable retirement tool by financial advisers of all types.” While there will always be critics, many blog owners are noticing this well-deserved change in attitude.
Many blogs are also reporting that new loan products might be released in upcoming months. Currently, FHA has extended their $625,500 maximum claim limit on HECMs through 2012. Still, as home values continue to rise, the demand for jumbo propriety loans might also increase. This has reverse mortgage blog owners predicting that a new jumbo product will be released within the year.
However, people interested in a propriety loan should be aware of a few different things. First, these loans will not be insured by the federal government. Since these loans are not insured, it is likely that borrowers will be required to have a great deal of equity in their home to qualify. Still, if and when this product is released, it will be interesting to see how these loans differ from HECMs.
Another interesting piece of information predicted in several reverse mortgage blogs is that one major lender has proposed the idea of using the HECM Saver as a tool to be used by seniors who are not yet eligible for Social Security. While waiting for Social Security benefits, seniors would draw income from a line of credit made available through the HECM Saver. In theory, this would give seniors a low-cost way to turn their home equity into a source of income; thus allowing seniors to wait to claim benefits until they reach full retirement age, which would increase their benefits in the future. Regardless of whether this idea becomes a reality, the constant plans for new products prove that the industry is one driven by innovation and continued development.