A reverse mortgage is a home equity loan without a payment. You do not repay the loan as long as the home remains your principal residence. Your income and credit rating is not considered when qualifying for the loan. The writer is a reverse mortgage expert.
There’s a snowball already rolling down the hill. . . . The number of Americans aged 45-64-who will reach 65 over the next two decadesincreased 34 percent from 1990-2000. Every day, the 50+ population is growing by 10,000 people, and this trend is expected to continue for the next 20 years. Right now, an American turns 50 every seven seconds.
In addition to being the largest and healthiest grout ever to come down the American housing pipeline, the Baby Boomen will also be the wealthiest bunch with approximately two-thirds of their assets in home equity. And, as we explain later in this chapter, they are going to stay put for entirely different reasons than their parents. The pressure on the baby boomer households to generate income and maintain lifestyle in the traditional retirement years will take on a new focus.
Just how big could the reverse market easily become? Approximately $74 billion by 2015, according to Wells Fargo projections. Jim Mahoney, a veteran in reverse lending, heads the Irvine, California-based Financial Freedom Senior Lending Corp., a subsidiary of IndyMac Bank. He believes the word is just beginning to spread regarding the nonrecourse component of the loan.
“But our biggest challenge continues to be education,” Mahoney said. “We constantly battle the idea some people have that we are going to take the house. A reverse mortgage is simply a lien-just like any other mortgage. Our progress, though, is obvious. We moved from a cottage industry to a real force in all 50 states.”
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