Are Boomers obtaining reverse mortgages too young?
Posted on Monday, March 26, 2012 at 2:42:52 PM
A new report by MetLife Mature Market Institute found that baby boomer, ages 62 to 64, represent one out of five applicants for reverse mortgages, according to Forbes. That is 21 percent, in contrast to the 6 percent in 1999, and almost half of all the applicants were under 70 years old.
A reverse mortgage is a unique loan that allows a homeowner over the age of 62 to convert a portion of the equity in their home into cash. The equity the person builds up over time from making mortgage payments will be paid out to the individual. The amount borrowed from the lender does not need to be returned until the owner can no longer use the property as their primary residence or if they fail to meet the obligations of the mortgage.
Once taken out, the balance grows and if a homeowner cannot keep up with property taxes or must move out due to illness, they are required to pay the debt back to the lender. As a result, taking out a reverse mortgage at a younger age allows the balance to increase more. Choosing the right residential financing option can allow older homeowners the ability to make decisions that fit their needs.