In the New Year reverse mortgages are poised to be as popular and useful as ever. Changes to the program will create a new landscape which may hurt those interested in a fixed rate reverse mortgage. Currently the fixed rate reverse is preferred by about 60% of borrowers. One downside, depending on your situation, is that the borrower is required to take full cash out draw with the fixed rate program. Because that may cause the borrowers to exhaust their equity faster and due to other possible political motivations, HUD has decided to put a moratorium on the fixed standard reverse as of Jan 31st.
As an industry, we don’t believe it will have a very large impact on the amount of reverse mortgages funded. The reverse mortgages is a needs based product and those who still need the loan will just have to settle on the adjustable which offers a credit line that includes a growth rate or the fixed rate saver which still offers a fixed rate and has low fees but lowers loan to value (cash out) amount. This will be an exciting year and we look forward to guiding you through it.
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