Reverse Mortgage Guide

The latest figures from the Census Bureau show that homeownership is down. In fact, the homeownership rate in the last quarter of 2007 was back to where it was in 2002.

What does this have to do with reverse mortgages?

Many reverse mortgage programs assume that borrowers will be able to increase the number of dollars available to them under reverse mortgage plans as home values rise over time. But if there is less demand for housing, then home value increases will stall and anticipated money will not be available.

The Census Bureau figures suggest that the price declines seen in most major markets during the past year are not a short-term issue. Instead, you have to wonder what happened to the folks who used to be homeowners. Where did these people go?

Actually, we have a good idea where they went: They got tossed out of their homes. The latest data from RealtyTrac.com shows that in 2007 there were 2.2 million foreclosure filings nationwide, a 79-percent increase over 2006.

In an odd way the gloomy economics that are now playing out in the marketplace suggest that if a reverse mortgage is of interest then today might be a good day to get one instead of tomorrow. Why? Lower home values in the future mean less equity and smaller loan amounts.

This entry was posted on Wednesday, January 30th, 2008 at 3:25 pm 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.