Free Reverse Mortgages Essentials Guide from MetLife Mature Market Institute Helps Consumers Make Informed Decisions About Ta...
December 21 2009 - 9:00AM
Business Wire
With increasing interest in reverse mortgages as a potential
source for retirement income, the MetLife Mature Market Institute
(MMI) has released a free guide, The Essentials: Reverse Mortgages,
to help consumers make informed decisions regarding the use of home
equity to help fund one’s retirement. The guide follows The MetLife
Study on the Changing Role of Home Equity and Reverse Mortgages,
which was released by the MMI earlier this year. That study found
that in today’s economic environment, older homeowners are
increasingly seeking new sources of retirement income and tapping
into their housing wealth in greater numbers, often using
home-equity loans or reverse mortgages. The guide will help
individuals take a comprehensive approach to ensure that, when
needed, the value of their home is used appropriately and
effectively to deal with the growing uncertainties of retirement.
Reverse mortgages are available only to those age 62 and older.
“Reverse mortgages can allow older individuals to receive funds
while they continue to live in and own their homes,” said Sandra
Timmermann, Ed.D, director of the MetLife Mature Market Institute.
“Our guide is a general introduction to reverse mortgages. It
explains important terminology, presents basic issues, and answers
frequently asked questions. While a reverse mortgage can be a
valuable tool for many older homeowners, it may not be right for
everyone. We suggest that individuals thinking about a reverse
mortgage consult with a certified U.S. Department of Housing and
Urban Development (HUD) reverse mortgage counselor and a reverse
mortgage lender to determine if the product is right for them and
understand the details as to how it would work in their particular
situation.”
The MetLife study on home equity and reverse mortgages, produced
in conjunction with the National Council on Aging (NCOA), found
that 35% of older Americans see their homes not just as secure
places to live, but also as collateral for a loan. About 14% have
taken cash out of their house through a home equity loan or reverse
mortgage. The use of home equity can be a viable source of income
in retirement to help individuals enhance or maintain their
lifestyle. Study findings indicate that older homeowners are using
home equity to increase income security, enhance financial
resilience to deal with unexpected expenses, and improve debt
management, among other things.
The Essentials: Reverse Mortgages provides the following
information for those considering a reverse mortgage as an
option:
- 95% of reverse mortgages are
Home Equity Conversion Mortgages (HECM). They are insured by the
Federal Housing Administration (FHA).
- The amount one can borrow
depends on age, type of reverse mortgage, current interest rates,
location of the home, value of the home, and FHA lending limits in
that area. For HECM loans, there is currently a $625,500 borrowing
cap for most areas.
- The costs associated with a
reverse mortgage typically include an origination fee, other
closing costs, and for HECM loans, both an upfront mortgage
insurance premium and an ongoing premium. These costs can be
included in the loan and paid (with interest) when the reverse
mortgage becomes due. A monthly service fee may also apply.
- With a reverse mortgage there
are no monthly mortgage payments. However, as long as borrowers
still live in and own their home, they continue to pay their
property taxes, homeowner’s insurance, and any home maintenance.
The loan, including accrued interest and any service fees, becomes
due when the borrower (or last borrower for a couple) dies, sells
the house, moves permanently to a new residence, or fails to live
in the home for twelve consecutive months.
- Borrowers may choose to receive
funds as a lump sum payment, where the cash will be available
immediately, in equal monthly payments for a fixed number of months
(or for as long as one borrower lives in the home), as a line of
credit to draw funds as needed, or any combination of these
options.
- Interest rates for most reverse
mortgages are tied to a financial index and vary according to
market conditions. Some financial institutions offer both fixed-
and variable-rate reverse mortgages.
The MetLife Mature Market Institute®
Established in 1997, the Mature Market Institute (MMI) is
MetLife’s research organization and a recognized thought leader on
the multi-dimensional and multi-generational issues of aging and
longevity. MMI’s groundbreaking research, gerontology expertise,
national partnerships, and educational materials work to expand the
knowledge and choices for those in, approaching, or caring for
those in the mature market.
MMI supports MetLife’s long-standing commitment to identifying
emerging issues and innovative solutions for the challenges of
life. MetLife, Inc. (NYSE: MET), through its subsidiaries and
affiliates, is a leading provider of insurance, employee benefits
and financial services with operations throughout the United States
and the Latin American, Europe and Asia Pacific regions. For more
information about the MetLife Mature Market Institute, please
visit: www.maturemarketinstitute.com.
The Essentials: Reverse Mortgages can be found at
www.maturemarketinstitute.com under “In Focus.” You may also order
a printed copy by sending an email to
MatureMarketInstitute@MetLife.com, calling 203-221-6580, or writing
to MetLife Mature Market Institute, 57 Greens Farms Road, Westport,
CT 06880.
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