Given the amount of advertising being done for reverse mortgages in Oregon and nationwide, it is surprising but the number of reverse mortgage is actually down. “This article explains a lot of the reasons behind reverse mortgages actually being off nearly 40 percent so far this year. Not only that, but the annual pace translates to only 70,000 transactions nationally for the entire year.
Wholesale and retail lenders active in the reverse mortgage market are less than half of past year’s lenders, according to Reverse Mortgage Insight, watching industry trends.”
In my opinion, reverse mortgages should be on the rise as interest rates are at all time lows, fees are lower than they have been on reverse mortgage, stock portfolios are oftentimes cut in half or worse and baby boomers reach retirement age. So, the question is, Why?
The first answer has to do with property values. A lot of seniors that still owe money against their home no longer have enough equity to qualify for a reverse mortgage due to falling property values, but that doesn’t explain the large number of seniors that own their homes outright. It may be for them that they believe they can’t get enough from their home now, with the reduced values, but in reality, with the changes in the program to mostly fixed rates from the primarily adjustable reverses in the past, more money is often available.
Some may think waiting for the recovery of the housing market may be their best bet, however, there are possibilities that FHA will change maximum mortgages for reverse mortgages in the future (down) and make this the wrong choice. There are others that are taking advantage of historic low rates on forward mortgages, but this still leaves them with monthly payments.
So, what does that leave? I think it is a lot of an public relations problem. A number of critical reports in 2010, from the National Consumer Law Center, Consumer Reports, US News & World Report, and the Comptroller of the Currency, put a lot of people off of reverse mortgages. The report from the Comptroller of the Currency even compared reverse mortgages to subprime mortgages which I believe is a injustice to the program. I believe sentiment on reverse mortgages has swung too far in the opposite direction – from complacent acceptance to paranoid rejection – and will at some point swing back.
One bright spot for reverse mortgages was reported in Reverse Mortgage Daily in that for the first time since December 2009, reverse mortgage were on the rise in July. This could mean that the market has hit bottom. Continued erosion of retirement accounts and low rates and fees on reverse mortgages could be just the ticket for many seniors in the days to come.
It has always been Laurie and my belief that an informed consumer can make a better decision than one that is making their decision based on feelings. These articles and reports are worth reading and should be considered before taking out a reverse mortgage. Reverse mortgages are not for everyone, but they are for more people than are taking advantage of them currently.
If you have questions about a Reverse Mortgage we will not pressure you to take one out, but it may be in your best interest to check out one now, rather than later. Please contact one of us today at 541-342-7576. Alpine Mortgage Planning is located at 1200 Executive Pkwy., Ste. 100, Eugene OR 97401. You can also e-mail Laurie here or Fred here. We are here to help you make the decision that is right for you. Reverse Mortgages are not for everyone, but they are an excellent choice for some people. Isn’t it time that you checked out the advantages of a Reverse Mortgage?