Reverse loans help senior citizens
More taking advantage of program to keep residents in homes
By Alicia Herbstreit
The Daily Reporter-Herald
Janet Jones said the ironic part of her retirement was while she had spent her career helping people into their first homes, she was still renting.
As a single woman, the 65-year-old real estate closer couldn’t afford to make the purchase herself. Instead, she opted for a reverse mortgage.
“It’s a great product for seniors who want to own their own home,” she said. “Otherwise, I’d been in low-income housing for seniors.”
With the cost of living on the rise at a time when people are living longer, more seniors locally and nationally are looking to reverse mortgages as a way to supplement their incomes, said Eddy Jo Yost, a reverse mortgage consultant with the Wells Fargo office in east Loveland.
“It was designed as a program to keep low-income seniors in their homes,” she explained. “There’s a much wider use of reverse mortgage funds than there ever used to be.”
According to Wells Fargo, lenders have recorded a 470 percent spike in participation of its reverse mortgage program from 2001 to 2004.
Although most seniors leverage their home equity to qualify, Jones said she applied her retirement money. Now the Loveland resident lives in a condominium. And without mortgage payments, she can afford to live on her Social Security income.
“It gives you a chance to support yourself and be more independent longer,” she said.
A reverse mortgage works by allowing people 62 and older to take out a new or second loan on a house by using their home equity or personal savings. After the home is bought or paid off, any leftover amount can be turned into monthly payments to the homeowner. Upon death, the home is then sold to repay the remaining debt.
Amy Guy, a housing counselor with Neighbor to Neighbor, said more seniors are comfortable borrowing through a reverse mortgage because of the federal protections.
“I think the word is getting out that reverse mortgages aren’t this evil, scary thing anymore,” she said. “The purpose overall is for them to be able to remain in their home and access the equity at the same time.”
Most reverse mortgages are home equity conversion loans that are insured by the Federal Housing Administration, a branch of the U.S. Department of Housing and Urban Development.
Yost said the loans also are offered through Financial Freedom and Fannie Mae.
After 15 years of specializing in the field, she said she has watched many seniors regain a sense of freedom.
“I don’t think people realize how just being financially strapped affects emotional and physical health,” she said.
Source: LovelandFYI
