While data show a housing recovery is on the horizon, it may be of little help to Baby Boomers — many of whom have homes that greatly depreciated during the recession.
Yet, reverse mortgages may be a solution for many looking to tap their home’s equity, says Investment News in a recent article.
After a modest decline last month, existing-home sales bounced back in September to their highest annual pace of the year, according to a report released Tuesday by the National Association of Realtors (NAR). However, the overall pace of sales remains below the level of September 2013.
“But overall, traditional buyers are facing less competition from investors searching for available homes,” Investment News says, citing NAR. “And with the pace of sales down, it remains to be seen whether there will be an adequate pool of buyers for all the houses that baby boomers will be looking to sell.”
Reverse mortgages are one way seniors can access their home’s capital beyond selling their home.
The number of the Department of Housing and Urban Development’s Home Equity Conversion Mortgages (HECM), which make up the majority of the nation’s reverse mortgages, increased for the first time in 2013 since peaking in fiscal year 2009 at 114,692 loans. About 60,091 loans were made in fiscal year 2013, up from 54,822 in 2012.
“Reverse mortgages are especially attractive now because interest rates are so low,” Gustavo Vega, managing director of Vega & Oprandi Wealth Partners in Miami, tells Investment News. “It’s sort of our last resort, but it can be very useful.”
In addition, home sellers also may be helped by planned changes that will make it easier for home buyers to qualify for federally-backed mortgages that require less money down, according to a statement Monday by Melwin Watt, director of the Federal Housing Finance Agency.
Read the article here.
Written by Cassandra Dowell