Some people are undoubtedly not agreeing with this statement. But the fact of the matter is, is that the FHA Reverse loan program is finally getting the respect that it deserves as a tool to plan for retirement.
It has had a serious image problem for many years, but that is finally beginning to shift away from such negative thinking. With a large aging population growing each day, a Reverse mortgage can fund longevity and allow for a creative option to extend retirement funds.
There have been several changes recently to the program, that went into effect October 1, 2013 that limit the initial amount that a borrower may receive and how much they can draw the following 12 months.
In spite of what some in the media have said in regards to the fees, they have not gone up. In fact the fee for the Mortgage Insurance Premium (that insures and guarantees the mortgage to be paid off in the future), has been reduced from 2.00% if the loan amount is under 60% of what they qualify for.
And it is now only .50%
However, if the initial draw is above 60%, the fee does increases to 2.500%. In reality, that is only a .500% over the original MIP charge. Given that we have seen substantial gains in home equity and that most seniors aren’t paying off a large mortgage, they will not be paying the larger fee for the MIP, but rather the smaller one.
I am going to share an article in following posts, that discusses why Reverse mortgages will gain in popularity in the future.