Dallas News Column: Age of Reverse Mortgages Has Arrived

“The age of reverse mortgages is here,” writes a Dallas Morning News column by syndicated columnist Scott Burns, who is also founding partner of investment advisory Asset Builder. Crediting the Saver Home Equity Conversion Mortgage with the sea change, Burns addresses this “small” change as opening a “floodgate” of interest.

The Dallas Morning News columnist writes:

“Used for long-term planning rather than emergencies, reverse mortgages are likely to become a major tool for the millions of Americans who have a lot more equity in their homes than in their retirement savings.”

Advertisement

The costs, Burns says, are not a major consideration in a comparison between the Saver and Standard upfront fees on a $250,000 home.

“What is happening is that reverse mortgages are becoming a financial planning tool rather than an emergency loan service,” he says.

The article continues to compare reverse mortgage options with other retirement planning tools.

Read the original article.

Written by Elizabeth Ecker

Join the Conversation (1)

see all

This is a professional community. Please use discretion when posting a comment.

  • Actually the author stated:  ”
    First, it’s not such a small change. Second, millions of retired homeowners are looking for ways to increase their retirement incomes. As a practical matter, I don’t see the cost reduction as that big of a deal. Using an online calculator, I found that a reverse mortgage on a $250,000 house would cost $11,626 in fees for the earlier form and $8,151 for the new Saver form. To learn more, visit the Housing and Urban Development website.”

    It seems the lender was quoting maximum origination fees on both Savers and Standards.  Despite that assumption, the fees for the Saver appears odd.

    Using his numbers, the author assumes a $822 per month payment grows to $380,000 as of the 240th month (20 years).  Thus he has assumed an effective interest rate of 4.75%.  Why he selected that interest rate is not revealed.

    The comment of Mr. John Mitchell was somewhat surprising.  The origination of fixed rate is currently about 70% of all HECMs, not 90%.

    The article was a rather superficial presentation of a HECM as a financial product.  It was OK but failed to look at outliving one’s life expectancy and other more mundane issues emphasizing the value of nonrecourse.   

string(100) "https://reversemortgagedaily.com/2012/06/03/dallas-news-column-age-of-reverse-mortgages-has-arrived/"

Share your opinion