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reverse mortgage market

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Did you hear? The Reverse Mortgage Market is expanding.

When the Federal Housing Administration (FHA) changed the regulations regarding the percentage of a home’s equity that a Reverse Mortgage borrower could access, along with a change in the options that the borrower had for receiving those funds, most financial observers predicted that Reverse Mortgages would decline. The change, which took effect in the summer of 2013, was thought to lessen the attraction that the HECM product would have for senior borrowers.

Increase in Loan Applications Helps Expand Reverse Mortgage Market

In a startling development lenders have actually been reporting an increase in new loan applications. The new regulations have, it seems, made the HECM even more attractive to retirees who want to use the equity that they have in their home to add to their retirement income. This has only helped the reverse mortgage market. There’s never been a better time than now to consider a reverse mortgage.

Today senior borrowers can access just 60% of their Reverse Mortgage funds, and only as a line of credit or as monthly payments. These regulations were introduced in order to make sure that borrowers spread out the proceeds of their loan to avoid the kind of financial distress that sometimes occurred in the past when borrowers could access a higher percentage of their equity and could take it as a lump sum payment.