As home equity levels continue to rise, the popularity of reverse mortgages is growing and because of changes implemented four years ago, the process is smoother than ever. In 2014, the Federal Housing Administration began requiring that all prospective borrowers submit to a complete financial assessment to determine if a reverse mortgage would benefit them. A new study shows that this new requirement has resulted the number of defaults dropping substantially.
The financial assessment includes reviewing a borrower’s credit history, any risks in their ability to maintain the terms of the loan and an examination of their income to make sure tax payments and insurance payments are affordable.
A reverse mortgage is a powerful financial tool that allows borrowers 62 years or older to use their home’s equity to eliminate monthly mortgage payments while also receiving supplemental income in the form of a lump sum, monthly payout or a line of credit.
Today, conventional conforming no-point 30-year fixed mortgage rates are averaging 3.875 percent and 15-year rates are near 3.375 percent.
Do you have a question for Real Estate & Mortgage Analyst Mehran Aram? Submit your queries about a home purchase, refinance, or reverse mortgage via Aramco.Biz, social media (#AramcoReport), or over the phone at (866) 381-8888 and your questions may be featured in an upcoming article.