Reverse Mortgages are not 'Clunky' by any means.

Today on CNN Money there is a video piece on Reverse Mortgages. This interview was featured in Revell on Retirement.

This short video simply confirms what I have been seeing for quite sometime:

Seniors are using the equity in their home to assist financially in their retirement years.

Alicia Munnell is Director for the Center of Retirement Research at Boston College. In this interview she speaks candidly about the troubles retirees are facing today. Included was:

• The future of Social Security will provide relatively less than it does today.
• Recent events have shown that 401k plans can be decimated as people are reaching retirement.

Alicia goes on to say in her interview that she feels more people will be forced to tap into their homes equity and that the best way to do so is through a Reverse Mortgage.

I like the interview with Alicia and I agree with her key points of the advantages of this program, but I have to disagree with her describing the Reverse Mortgage of today as being 'Clunky'. She uses the term 'Clunky' because she feels these loans are still need some perfection. Alicia's opinion is that these loans are expensive, that there are limits to how much the senior can access, and dislikes the regular monthly payments (servicing charges). It is also mentioned that not a lot of banks do Reverse Mortgages, and that she hopes there becomes a more streamline system for them.

I have to kindly disagree on most of her 'Clunky' concerns in several points:

1. The reverse mortgage is expensive in comparison to a conventional mortgage. Alicia didnt note that the concern for excessive fees has been addressed and safegaurds are in place. In fact, the Fedearl housing bill from last summer addresses this and even put limits into place on what the loan officer is allowed to charge. This was a great benifit to protect the senior borrower.

2. Lending limits are also not so 'clunky' these days. In a recent blog post I explained the increase in the lending limits by more that $365,000 so that the owner of a high value property can access more of their equity. I have several borrowers since this new limit has gone into effect that have taken advantage of the additional cash now available to them.

3. I think the monthly fee Alicia is referencing is reasonable. Most of the banks that I work with, and there actually is many to choose from, charge a monthly service fee ($25-$35 a month) for the monthly statements the borrower receives and to manage the Credit Line many opt to take out.

4. In regards to streamlining the process, I know it couldn’t be any easier to take out a Reverse Mortgage today. Most of my conventional loans are being completed in 30-45 days where as a Reverse Mortgage can be completed in less than 3 weeks. This is because the banks I use to write this program specialize in Reverse Mortgages and nothing else. My average Reverse Mortgage is completed in 3 weeks or less. It doesnt get much more streamlined than that!

To view this interview in its entirty, please click here. Revell on Retirement Interview

If you are over 62 years of age, and looking for a smart way to tap into your equity, contact me today. A Reverse Mortgage may be a great options for you.

Thanks for visiting... Bryan Husen

Reverse Mortgage Loan Limits Rise By More Than $365,000.

Seniors with large homes who have been waiting for higher loan limits will be pleased to know that the Congress has effectively doubled the FHA loan limit, meaning that far-larger FHA reverse mortgages (HECMs) are now available.

The old FHA loan limit was $362,790 in the lower 48 states. The stimulus package passed by Congress and signed by President Obama increases the FHA mortgage limit to as much as $729,750 for single-family homes in “high-cost” areas. Since an estimated 90 percent of all reverse mortgages are insured under the FHA HECM program, this means that vastly-larger loans will be available through reverse mortgage financing under the new standard.

This is great news for many of my Reverse Mortgage clients that have homes of high value that had decided to wait on the program because they could not access as much of their equity as they wanted.

Example from this week of how this lending limit has helped:

I have a borrower that owns a home with no mortgage in Sandy OR. The home is worth over $600,000, and with the old lending limits he was only able to access $295,000. Now, with the new lending limits his available funds have increased by almost $100,000. The lending limit increase is a great benefit from the new stimulus package.

Be sure to contact me today if you would like to see how a Reverse Mortgage can benefit you at BHusen@Sunsetmortgageco.com.