The downward trend in home values has had a doubly negative effect on seniors looking to use the equity in their homes. The combination of falling home values and new HUD (U.S. Department of Housing and Urban Development) regulations that slashed reverse mortgage proceeds by 10% has resulted in significantly less money available through reverse mortgages.
Yet, given the difficulties many are facing, reverse mortgages are becoming more popular than ever. Golden Gateway Financial, a comprehensive financial resource for seniors and retirees, reports a dramatic increase in the number of individuals who have researched reverse mortgages in the past 90 days. Over that time period, the number of seniors using the company’s online calculator has increased nearly 90% from the previous quarter.
“Older Americans continue to feel the lingering effects of the recession more than other segments of the population and a growing number of them are actively looking for ways to generate additional cash in retirement,” said Eric Bachman, founder and CEO of Golden Gateway Financial.
Holly Hack of Bank of America in Traverse City says reverse mortgages are still a viable option. “The reverse mortgage is still a great option for the seniors who need it,” she said. “The reverse mortgage gives our mature borrowers (62 years or older) access to the equity in their home without the burden of a monthly mortgage payment.”
For many, the current need outweighs the desire to outwait the downward trending market. And those who think we haven’t reached the bottom yet are eager to tap into the current value of their homes.
Hack said that is not a bad idea. “The senior who has considerable equity, but limited cash flow, could benefit from a reverse mortgage,” she said.