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Let’s get away from TRID for a moment. Recent revisions to the reverse mortgage program have made it a more viable option for more retirees, especially those working a little longer with a consistent monthly income (Reverse Options).
For those 62 or older that own a home (and I’m one), it could provide additional wealth while reducing their housing expense. BTW, a reverse mortgage is exempt from the new TRID rules (and related headaches). At least for now.
Reverse Mortgages, also known as HECMs (Home Equity Conversion Mortgages), have been around for a while. Recent updates which make the program more solvent.
By requiring borrowers to have the capability to maintain the home and pay the annual costs for real estate taxes and adequate insurance, it appears they will now stick around even longer. That is a good thing for older consumers who own and have equity in their home. It is also a good opportunity for lenders not offering these loans.
The Baby Boomers are aging and many may need some help in continuing with their lifestyle due to the effects on their retirement accounts from the recent, and now current, hits to the stock market.
Let’s face it Social Security income alone just ain’t gonna cut it. Retirees will need some additional stream of income and/or revenue. For many a Reverse Mortgage may be the answer.
The challenge is to get the buy-in of the heirs. Some don’t like the idea of their parents using up the equity in their home.
However, when explained properly they can be made to understand that this is a way for their parents to continue to enjoy life and the freedoms that come from owning their home without the responsibility for a monthly mortgage payment, or of being a burden to the children as they grow older.
For those who may now own their home free and clear, it offers them the option to extract some of their equity to either pay off other debt, maybe take a long overdue vacation, add to existing investments used for retirement or maybe even give a gift of the funds to their heirs now. It provides options without increasing expenses.
If you are not offering these Reverse Mortgages now, you may want to look into doing so. It will provide you and your originators with another source for business and income.
Just remember, like any mortgage loan, quality is still king. Bad loans not only hurt the consumer but will hurt the program and those who invest in, and rely on it. Don’t want that to happen.
So, if you’re looking for a way to expand your business, reverse the rising costs of originating loans while increasing your income, Reverse Mortgages may be the answer. Please lend responsibly.
