Reverse Mortgages have been around for a long time, and over the last decade have become quite popular for the companies selling them and the consumers taking equity out. During the wild housing boom from 2003-2007, reverse mortgages really took off as consumers were able to take large chunks of leveraged money at historically low interest rates. (You also saw numerous stories about seniors being duped into taking out equity in their homes to buy the hot new stocks, REIT’s, and even annuities). But of course, all of this fell apart really quickly with the financial collapse of 2008 as credit, home equity, and almost all investments took a big nosedive.
Of course, with the aftermath followed new rules of engagement and more stringent rules for reverse mortgages (which needed to happen). And the reason for the rules (and not a total change of law to prevent reverse mortgages) is that they can make a lot of sense for the right person in the right situation. But unfortunately, a few bad apples made the rules a bit tougher for the consumers who really do need reverse mortgages. Check out the video discussing all of the new rules below.
To watch on YouTube, click Reverse Mortgage Basics