Boomers are notoriously unprepared for retirement. Many have failed to save adequately. Add to that the devastation in the housing market during the 2008 crisis and many have been left with fewer assets on which to draw. The US Department of Housing and Urban Development’s (HUD) home equity conversion mortgages, also known as reverse mortgages, have become a prime source of retirement funding. So much so that the practice is predicted to become a normal part of Boomer retirement planning
The number of Boomers seeking reverse mortgages has brought the average age of reverse mortgagees down significantly since the 2008 crisis. Previously, the average age range was from 70 to 74 years of age; Boomers have brought that range down to 65 to 69 years of age. Some as young as ages 62 to 64 have taken advantage of the product.
The percentage of home owners utilizing reverse mortgages has risen to 46%. There are restrictions for would-be borrowers. They have to be at least 62 years of age with a low debt to equity ratio. Their mortgage balance must be low enough for the proceeds from the reverse mortgage to pay off the balance at the time of closing.
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