The reverse mortgage is a financial instrument aimed at home owners, 62 years old and up, who have decent equity in their property. Reverse mortgages to allow homeowners get money out of their home/condo and also free them from making future mortgage payments for as long as they live in their properties. One would think that this type of program would have people lining up.. however the opposite seems to be trend. In the conservative Cincinnati real estate market the lack of understanding, high fees and skepticism about the programs have added up to unenthusiastic potential participants.
Personally I tried to research the ins-and-outs for my parental unit and decided….that too many of the details of the equation were missing. It appears if you don’t outlive your equity and don’t require further funds for alternate housing and medical care- then the reverse mortgage may be a great asset….. however without investigating the long term financial impact with the appropriate legal and financial representative- seniors may be short changing themselves. So for us-it’s not the best option at this time and according to a recent article in the New York Times, older children living the property or heirs expecting to sell are facing complex problems.
While demand is low and “potential” is high the government, through FHA (Federal Housing Authority) is trying to stir up activity for HECM Loans (Home Equity Conversion Mortgage). But like many government sponsored housing incentives, HECM backed loans don’t seem to appeal to many lenders or consumers and some of the lenders filling the void are up front with what happens when the borrower dies.