Reverse Mortgage Guide

Ray Denton writes and says “my peers and I have a file of homeowners waiting for the FHA Modernization bill to pass, and approximately 50% of all Reverse Mortgage candidates I’ve talked to are waiting for it. Expect the number of HECM originations to skyrocket after the bill has passed. They’ll be a backlog with Counseling facilities and Underwriting for quite a while.”

I suspect this is right.

I also suspect that while reverse mortgage originations are being held as people wait for the authorization of larger loan amounts in Washington, home values in many areas are falling.

The conflict is obvious and overt.

National Association of Realtors reports that “the median existing single-family home price was $206,700 in May, which is 6.8 percent below a year ago.”

In other words, if you raise reverse mortgage lending limits and at the same time home values fall then many borrowers will not be ahead. Less home value means less equity and less equity means smaller reverse mortgages for many borrowers.

The result is rather than wait, owners with moderately-priced and less expensive homes who feel that value declines will continue may want to consider getting a reverse mortgage now. Those with homes in the upper brackets can still wait because they will have sufficient equity to maximize reverse mortgage options if loan limits are raised.

This entry was posted on Friday, July 11th, 2008 at 5:40 am and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.