The New Math of Reverse Mortgages

June 22, 2022

The New Math of Reverse Mortgages

Today, reverse mortgages have evolved and many of the negatives have been addressed with federal insurance and oversight. Now we are seeing more of them being used as it was originally intended – a financial planning tool for senior borrowers to gain access to their equity and use it in a way that best suits their needs.

 

And with the oversight, more protection is offered to borrowers who do a reverse mortgage HECM to help ease the financial burden, including:

  • Limits on how much borrowers can obtain, so seniors don’t opt for large lump-sum distributions they cannot afford
  • Protection from default if the value of the home declines to less than the loan amount
  • Provisions that secure a surviving spouse’s right to remain in the home after the borrower’s death

“HECMs represent 95% of the reverse-mortgage market in the U.S.,” according to the National Reverse Mortgage Lenders Association. “Today, there are roughly 580,000 HECMs totaling about $113.5 billion,” according to the association.

 

Read the article in the Wall Street Journal on the full mechanics for qualifying a reverse mortgage and if it may be an option for your senior borrowers to consider.

 

Find out more about reverse mortgage options on the Plaza Home Mortgage® website, and reach out to us at Reverse@plazahomemortgage.com. Let’s explore adding this strategy as another option for your borrowers and your business.


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