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Mortgage: for those twilight years
Tracing back, the concept of reverse mortgages began when one good soul,
Nelson Haynes of Deering Savings and Loans wanted to help out the widow
of his high school football coach. Today that small act has developed
into a popular financing option for the senior citizens. With about
6,000 people turning 62 every day, the market is on an upswing.
2004 witnessed a growing number of applications for reverse mortgage.
Compared to 2003 which witnessed a rise of 112% in applicants, 2004 had
only 109%, yet Home Equity Conversion Mortgage (HECM) grabbed the lion's
share with 90% of the pie. This is attributed to the growing awareness
especially from the government initiative to educate the senior citizens
about the benefits of reverse mortgage. In its early years, Americans
were apprehensive about this backward process. They felt that this
income getting mortgage has something fishy associated. Some lenders too
helped spread rumors because the products did not involve much security
to them, especially with the FHA insured HECM.
The concern for seniors has taken the driver's seat on the federal
agenda. There have been large scale awareness campaigns, including
seminars and workshops .This year the much talked about high loan limits
for Fannie Mae's Home Keeper Loan has been raised from $333,700 to
$359,650 with a 50% high for Alaska, Hawaii and US Virgin Islands. While
HECM have increased its high loan limit to $312,896 from $290,319,
subject to geographical area specifications. The lower limit has also
been raised amidst much criticism to $172,632 .The purpose of roping in
the lower equity home owners into this benefit stands defeated. The
prime reason being, the risk involved.
The reverse mortgage is primarily for the retired citizens above 62. Who
have no source of income and who more often than not spend the rest of
their lives amidst mounting medical bills. This is one loan which does
not check your credit and your salary stubs. You only need to own a
house which has no lien attached and you can borrow against its current
equity. The best part of the scheme is you don't have to make those
monthly payments, rather you get an income. This frees up money for all
kinds of uses and is tax free.
Reverse mortgages will become more popular as more and more products are
peering in and the rates are making only gradual improvements. This has
found a place on every American's long term plans. Last year saw reverse
mortgages occupying 3% of the mortgage market that is set to triple in
2005 according to the National Reverse Mortgage Lenders' Association.
Our last years will also be a no-compromise deal. Thanks to Reverse
Mortgage.
About the author: Lance Williams is an accomplished contributing
writer presently working in association with http://www.mortgagefit.com.
He is a specialist in mortgage and real
estate.
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