2008 is expected to be a big year for the reverse mortgage industry. Reverse mortgages are loans for homeowners, 62 years old and older, that allows them to get money from the equity in their home.
The money doesn’t have to be paid back until the owner dies, the home is sold, or the owner leaves.
In 2006, the number of reverse mortgages rose more than 55 percent.
More and more seniors needing extra money have come into Barry Scoles’ office. Scoles is Vice President of First Reverse Mortgage USA.
“We know that seniors are living longer, so they’re worried about stripping themselves of resources, and when they need them, they won’t have resources,” Scoles said.
This month, lawmakers approved the FHA Modernization Act. It expands the number of reverse mortgage loans underwritten by the government. It also provides more protection for senior homeowners and lowers the loan’s origination fee from two percent to 1 ½ percent. President Bush is expected to sign the bill in 2008.
“That’s a full 25 percent reduction in the origination fee that will be permitted by law to be put in a reverse mortgage, so that will result in (a) significant amount of savings,” Scoles said.
Scoles says he does not recommend that those who are selling a house get a reverse mortgage, unless they are desperate for funds.
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