June 24, 2007
Today on the front page of the business section of the Los Angeles Times is an article on reverse mortgages called "Reverse Mortgage can be a golden opportunity". This article in my opinion depicts a very accurate description of reverse mortgages and the state of the current industry. I recall a few years ago when I first read about reverse mortgages I consulted with some long time veterans in the industry to get some advice on how to get started. My friends thought I was crazy. "Those are bad loans", "The bank takes the house." "They are a hard sell." I heard it all, but I new in my heart reverse mortgages would become mainstream. The popularity is increasing in double digits every year, both in the industry side and the consumer side.
If you ask a senior about reverse mortgages, they've heard of them. If you ask your average financial planner, they'll say it is a last resort loan. The fees are high. If they have looked at reverse mortgages they haven't looked at them lately. Wall Street has perked up and the hum is that the secondary market is begging for packages of these loans. The truth is reverse mortgages make sense.
Seniors are faced with a higher rate of inflation than most of us because of their medical needs. We are all living longer. The third largest reason a borrower attains a reverse mortgage is to pay for medical or care costs, eliminating house payment and supplementing retirement income e are 1st & 2nd. Living on a fixed income, living longer, reduced benefits, pension plans under funded, too many older Americans are being sandwiched with costs that are affecting their ability to live in even a simple standard of living in retirement.
Reverse mortgages are here to stay. I predict they will be as common as an IRA. The average financial planner will be saying not "if" you should get a reverse mortgage but "when". I think Jonathan Peterson's comment that the mortgage of the future will simply start reversing at a certain age is a brilliant idea. Our older borrowers need a reverse HELOC with no payments, in Australia reverses can be done on commercial and investment properties. Home purchases with a reverse will be common place for seniors. If you think reverse mortgages have gotten popular? You haven't seen anything yet. If you'd like to know what's happening in the reverse mortgage industry, call me. I'm Angella Conrard, Reverse Mortgage Advisor.
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