Revisiting Reverse Mortgages Home Loans for Older Adults

According to the latest U.S. Census, although the Northeast has the smallest number of people aged 65 and over, the region is home to the highest percentage of over-65 residents: just over 14 percent. Connecticut ranks among the top five states in the nation with the largest percentage of the total population aged 85 and older. That population grew 4.9 percent from 2000 to 2010, second only to New Hampshire out of the New England states, which grew 6.5 percent. Because of the large numbers of senior citizens in New England, the region is quite a strong market for reverse mortgages, a type of loan structure that is only available to senior homeowners 62 years and older.

Basic Facts

What is a reverse mortgage? It is a special type of home loan that lets you convert a portion of the equity in your home into cash, according to the federal Department of Housing and Urban Development (HUD), which administers the great majority of them.

Although the interest keeps building up, the reverse mortgage doesn’t become due or payable until the borrower passes away or moves out of the home permanently, meaning that he or she hasn’t lived in the home for a year or more, according to Peter Bell, president and CEO of the National Reverse Mortgage Lenders Association (NRMLA).

The repayment amount can’t exceed the sales value of the home. After the loan is repaid, any remaining equity is distributed to the borrower or the borrower’s heirs or estate.

“There are liabilities taken on by lenders as part of their responsibilities as FHA lenders,” says Bell, but “the FHA insurance is designed to help mitigate those liabilities.”

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