While recent rule changes have made reverse mortgages more difficult to get, they have also made them more attractive, writes Investor’s Business Daily in a recent article published by Nasdaq.
“Seniors may want to tap their home’s equity for retirement cash flow,” Investor’s Business Daily says. “But selling the home might not be desirable or practical. One solution: a reverse mortgage.”
Investor’s Business Daily explains reverse mortgage eligibility requirements, as well as recent changes that have offered borrowers more safeguards and flexibility.
On such change requires lenders to perform a financial assessment on all home equity conversion mortgage (HECM) applicants.
“Applicants with questionable finances may be denied an HECM,” the publication says. “Or they may be required to set some of the loan proceeds aside to cover costs. So HECMs can be difficult to get.”
Recent changes may also encourage more married couples to seek HECMs.
Because older borrowers can get more cash than younger ones, some married couples borrow only in the name of the older spouse in order to increase the amount they’ll receive. Previously this strategy posed problems. When the older spouse died, the surviving spouse — not named on the mortgage — could face foreclosure if unable to repay the loan.
“Under pressure, the federal government changed the rules in 2014,” explains Investor’s Business Daily. “Now a nonborrowing surviving spouse can remain in the home if certain conditions are met.”
Read the article here.
Written by Cassandra Dowell