The use of reverse mortgages among U.S. senior citizens could be a solution for aging homeowners’ future housing problems, according to the Department of Housing and Urban Development (HUD).
The HUD released the recommendation in a recent publication that sought to determine the advantages of Home Equity Conversion Mortgages (HECMs). It will compare the situation of those with HECMs to elderly homeowners that are yet to take out the same mortgage type.
The HUD’s Office of Policy Development and Research said in its latest Evidence Matters report that HECMs could solve the affordable housing problem for many senior citizens. By taking out a reverse mortgage, they never have to leave their property. A caveat, however, requires you to pay ongoing maintenance, tax, and insurance costs.
On the other hand, a separate study will aim to review the advantage of HECMs for older residents. Some of the analysis’ case points will include a comparison of HECM defaults to non-settlement of real estate taxes or insurance payments. It will also compare “tax delinquency and property tax relief program participation of HECM borrowers and similar non-borrowers,” according to the report.
The multifamily industry also recognized the problem of affordable housing for the rental market, as growing demand would further worsen the situation, according to a new survey commissioned by Freddie Mac.
The poll showed that a growing population and rising demand provides better business opportunities while lifting rates for renters at the same time. However, many of the survey’s respondents acknowledge the important expanding more affordable options to meet the needs of seniors. For property developers, many HUD multifamily loans offered by financial firms like Bonneville Multifamily Capital provide assistance to achieve this purpose.
As the elderly population grows, a reverse mortgage could be a viable solution for many senior citizens in the U.S. However, you should be ready to pay ongoing maintenance, tax, and insurance costs because of borrowing against your home.