Reverse Mortgages: The Choices Expand
The Wall Street Journal, November 14th, 2007
It may sound hard to believe, but one part of the
mortgage market is hot: reverse mortgages. And that's giving older
homeowners more options to tap the equity in their homes -- but also
opening the door to more confusion and mistakes.
Only a year ago, homeowners interested in reverse
mortgages had little to choose from beyond the plain-vanilla,
government-backed products that have long dominated the market. Such
mortgages essentially allow homeowners at least 62 years old to sell a
large chunk of their home equity back to a bank or other lender in
exchange for a lump sum, monthly payments or a line of credit.
Now, nearly a dozen large banks and mortgage lenders
have launched reverse-mortgage products with lower fees and larger
payouts. One lender has reduced the minimum age requirement to 60;
others are making loans on second homes and vacation rentals. "Jumbo"
reverse mortgages -- for houses valued at as much as $10 million -- are
becoming more common.
With a reverse mortgage, instead of the borrower
making payments to the lender, the lender makes a payment or payments
to the borrower. The borrower keeps control of the house and doesn't
have to pay back the money as long as he or she lives there. When the
homeowner dies or moves out, the loan is typically paid off by selling
the house, and any money left over goes to the homeowner or the
homeowner's estate.
Read more of this article.
About Reverse Mortgages: Learn all about reverse mortgages at NewRetirement.com