Growth of reverse mortgage market in 2010
Reverse mortgage is a program that offers a special type of loan to the senior citizens. To get this loan, you have to be at least 62 years old. Instead of paying to the lender, you get paid by the lender, and the payment continues till you remain in your home. If you want to convert substantial home equity into cash, then also you can opt for this. Generally, it is tax free. You can opt to receive the cash in monthly installments or can take a lump sum.
Types of reverse mortgage
There are three (3) main types of reverse mortgage. They are:
- Single-purpose reverse mortgage: You can take this to repair or renovate your house or to pay property taxes. You can use this for a single purpose only. If you have a low or moderate income, you can get this loan.
- Proprietary reverse mortgage: This is the most expensive type. You can use this for any purpose. However, you can take this loan only if you have a high income or a high equity.
- Home equity conversion mortgage (HECM): It is also an expensive loan and is backed by the HUD. It will give you larger loan advances at lower costs, in comparison to proprietary reverse mortgage. You can take this loan for any purpose and there is no income restriction.
Growth of reverse mortgage market in 2010
Since its onset, reverse mortgage market has been successful and expanding. In the year 2010, the expansion continued at a measured speed, restricted by fewer investors and warehouse liners. As a result, Fannie Mae may not purchase as many number of products, as it has done in the earlier years. The growth is observed in larger states, where the senior population is more. Three of such states are Texas, Florida and California. In these states, new higher loan limits will be served. Ginnie Mae is providing the security for all these transactions.
Secondary market potential for reverse mortgage
The insurance companies are also coming forward with a new interest and are picking out reverse mortgage products as prevaricate against their traditional policy-customers. So, if they invest in reverse mortgage, they would earn as life insurance will run against average assets. So, the insurance company earns revenue from its life insurance portfolio and then invests in appreciating assets, which will later pay them insurance recipients, with the death of a policy holder. They may also sell long-term products to the seniors, like, long-term medical care. This product will be profitable for a young senior, who is just 62 years. As these life companies are getting entry into more number, the reverse mortgage business is expanding fast.
During this time of economic uncertainty, only proper education about reverse mortgage will convince potential buyers to opt for it. As more players are entering into the market, investor capital has increased and the oncoming years are predicted to have a good growth in reverse mortgage industry.
Translator
Stats