Since the recession started several years ago, the reversed mortgage has been rarely taken advantage of as a financial product. Today, however, a good number of U.S. baby boomers are turning to it as a source of retirement income.
In a situation when many retirees haven’t saved enough to live a worry-free rest of their lives, there still one option for fresh cash – their home. A reverse mortgage allows people to borrow money against that, and they don’t have to make any payments on the loan until they move or die.
According to industry publication Inside Mortgage Finance, in 2013, borrowers took $15.3 billion of the loans, which marks an increase of 20% from the previous year. Back in 2009, there were a record $30.21 billion of reverse mortgage loans made.
Brokers and bankers agree that the 77 million retiring baby boomers will most likely boost the growth of loans, and help the sinking home loan market recover a bit.
On the other side, most bigger lenders don’t feel comfortable with the loans. In 2011, Wells Fargo &Co and Bank of America backed out of the business of reverse mortgages, unsure of the unpredictable home values and the level of delinquencies.