Recent announcements from the Department of Housing and Urban Development have made reverse mortgages significantly different from what they were a couple months ago according to the Baltimore Sun.
Monthly insurance premiums on new loans went up, making an expensive product even more so. But HUD has offset that rise by introducing another reverse mortgage — the HECM Saver — which slashes the upfront cost.
“It’s a mixed bag,” says David Certner, legislative policy director for AARP, of the reverse mortgage market.
The Saver mortgage with its lower fee is better suited for homeowners who don’t expect to remain in their home for long and don’t have a need to borrow as much, says Peter Bell, president of the National Reverse Mortgage Lenders Association.
Starting last month, counselors must ask a series of questions to make sure that homeowners know what they are getting into, says Barbara Stucki, a vice president with the National Council on Aging. If homeowners don’t understand, they won’t receive a counseling certificate needed to get a loan, she says.
Robert Nowlin took out a reverse mortgage on his Baltimore home three months ago and has no regrets. “We had been under stress from bills for quite a while,” says the 71-year-old, adding that his wife had been working two jobs to try to keep up.
With the proceeds, bills were wiped out, Nowlin’s wife was able to reduce her hours at work and the old mortgage was paid off, which freed up $600 a month for the couple. And some of the leftover funds were used to take trips to Georgia and Florida, Nowlin says. The reverse mortgage, he says, “gives us some sort of peace.”
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