50+ Lifestyles

Seniors Are Thinking in Reverse These Days!

By Bill Klinkenberg
Wells Fargo Senior Products Division

The words “Reverse Mortgage” have raised questions and concerns in the past throughout the United States. However, it would appear that those questions and concerns have been lessened over time. In April of 2009, it was reported that 11,660 loans were taken which is the record for monthly volume.1 What happened? Why is the number of reverse mortgages increasing every year?

In my opinion, seniors are becoming more educated about the reverse mortgage program and the benefits it may provide them. Many people are aware that a reverse mortgage may allow seniors to stay in their home without making a monthly mortgage payment. Additionally, it is no secret that seniors can access the equity they have built in their home to use any way they choose with flexible disbursement options that may be deposited directly into checking accounts, similar to social security.

Beginning January 1, 2011, 10,000 baby boomers will turn 65 every day in the United States.2 With this growing number of seniors coupled with challenging economic times, seniors may be looking for ways to alleviate financial worries by paying off existing mortgages or high interest debt. While home values have remained fairly constant in the Quad City area, senior homeowners may still feel the financial pressures from today’s market.3 As a result, many are becoming more and more educated on what options may be available to them so they can not only continue to live in their homes but to start enjoying a more comfortable retirement as well.

Another theory as to why reverse mortgages are increasing in popularity is that they are now available to seniors who are looking to purchase a new home that better suits their needs. The Home Equity Conversion Mortgage (HECM) for purchase is an FHA-insured reverse mortgage that enables senior homebuyers, age 62 or older, to purchase a new primary residence and obtain a reverse mortgage in simultaneous transactions without taking on a monthly mortgage payment. The new reverse mortgage for purchase feature also allows buyers to combine reverse mortgage proceeds with a down payment from their current home sale or other assets to purchase a new home. This new program feature allows for seniors to purchase a home that is more suitable to their needs.

The area homebuilders and real estate agents are learning more and taking interest in this new program feature that just became possible for seniors on January 1st of this year. The new feature allows real estate agents and homebuilders to expand their customer base by telling prospective buyers about this program and its benefits. The program may also help them sell more homes with a new financing option. Finally, real estate agents may benefit from two transactions, a home sale and purchase. It is a win-win for both homebuyer and agent.

Continue to look for reverse mortgages to remain popular in the Quad City area. I encourage you to educate yourself on this program as it may benefit you, a friend or family member. If you need more information, I would encourage you to work with Wells Fargo Home Mortgage, the nation’s leading retail originator of reverse mortgages. Our team is here for you, and ready to help you or a loved one realize the benefits of a reverse mortgage.

1 Based on HUD data statistics found on the National Reverse Mortgage Lenders Association Web site thru June 2009. http://www.nrmla.org/RMS/STATISTICS/DEFAULT.ASPX?article_id=601
2 Alliance for Aging Research, www.agingresearch.org, 2009.
3 Based on information from the Quad City’s REALTOR’S® Office and the Quad City Homebuilder’s Association taken from the National Public Radio Web site: http://www.npr.org/templates/story/story.php?storyId=105273787

This information is accurate as of date of printing and is subject to change without notice. Wells Fargo Home Mortgage is a division of Wells Fargo Bank, N.A. © 2009 Wells Fargo Bank, N.A. All Rights Reserved. #66038 7/09-10/09.