Reverse mortgages for purchases have been around a while but they stand to see more use as younger baby boomers hit retirement age. The mortgages are backed by FHA and they let households buy a home without having to make monthly mortgage payments. Instead, buyers put up a fairly sizable down payment and finance the rest with the reverse mortgage. The monthly payments then come out of the reverse mortgage each month, freeing up money for households to save or spend on other things. Of course, when they go to sell the house or refinance the mortgage, the funds taken out of the mortgage to make the monthly payments count as a negative against the equity in the house.
Given the possibility that older buyers could come to real estate practitioners with questions about how these work, the mortgages are explored in the latest Voice for Real Estate news video.
The video also looks at the confirmation process of Ben Carson to be secretary of the U.S. Department of Housing and Urban Development. In testimony before the Senate Financial Services Committee, Carson said he supports the opportunity of all Americans to buy a home and that preservation of the 30-year, fixed-rate mortgage should remain a part of the market. He also said he supports a federal backstop in the secondary mortgage market although he also wants to cultivate more private options.
Carson’s nomination has passed the Sensate Financial Services Committee and now awaits passage by the full Senate.
The video also looks at the 10-year high in existing-home sales markets saw last year and what stands in the way of continued strong sales: inventory shortages and rising interest rates.
Also in the video is a look at what happens next now that the Trump Administration has suspended the planned reduction in the mortgage insurance premium on FHA loans.
