Reverse Mortgage Guide

If you’re thinking of a reverse mortgage you’re old enough to know the value of savings.

BlownMortgage.com has a posting which is exactly on the money. A loan officer, Chris Johnson, describes a top-rated borrower, aged 24, who earns $37,000, has a 731 credit score, lives at home and has one expense, a $176 monthly car payment.

Amazingly, this borrower has $500 in checking and some $1,800 in a retirement account.

The question is: What ever happened to savings?

The Bureau of Economic Analysis said October 31st that “personal outlays increased $129.1 billion (5.2 percent) in the third quarter, compared with an increase of $151.7 billion (6.3 percent) in the second. Personal saving — disposable personal income less personal outlays — was $86.5 billion in the third quarter, compared with $64.4 billion in the second. The personal saving rate — saving as a percentage of disposable personal income — was 0.8 percent in the third quarter, compared with 0.6 percent in the second. Saving from current income may be near zero or negative when outlays are financed by borrowing (including borrowing financed through credit cards or home equity loans), by selling investments or other assets, or by using savings from previous periods.”

Zero savings? Negative savings? How can anyone build wealth without savings? How can foreclosures be prevented without money for a rainy day?

Johnson has a really smart analysis of current underwriting standards at BlownMortgage.com. For more, see:

Why 2011 might not even be the end

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This entry was posted on Tuesday, November 27th, 2007 at 2:51 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.