Reverse mortgage borrowers are starting to get smart. That's good news for the elderly population that is taking out reverse mortgages by the dozen. But it could be bad news for a niche group of first-time home buyers who have benefitted significantly from the problems that have traditionally plagued the reverse mortgage market.
The main problem with reverse mortgages has been a lack of understanding on the part of the borrower and an issue with predatory lending that has made these people vulnerable to bad loans. Ultimately what has happened for many is that they've taken out reverse mortgage loans that they didn't understand and ultimately faced home foreclosure. The government and good reverse mortgage lenders are working to change this so that the reverse mortgage can work the way that it's supposed to.
However, in the face of this as well as because of the general housing slump, we've seen a market in which home values are on the decline. Although many people are having trouble qualifying for home loans in the new market, there remain a significant number of people who have enough money to buy a house. Many first-time home buyers have emerged to purchase a home with their savings, something they can afford to do now that the market is bad.
As the reverse mortgage problem gets fixed and these loans increasingly work the way they're inteded, more and more seniors will be remaining in their homes. Home values will go up and these first time buyers may find that it's harder to get a home. If you're in the market to buy, you may want to talk to a finance professional to get the deal done now!
Question of the Day: Do you believe that this is a good time to invest in real estate?
