With the economy recovering from the Great Recession and home values rising in Florida, Donna Linton says all of this is paving the way for more people in her home state to turn to reverse mortgages, including those who want to use them to take their dream vacations.
Linton, a loan originator with Sterling Mortgage Services in Stuart, about 100 miles north of Miami, says a rebound in the local housing market has helped with people turning back to reverse mortgages in the Sunshine State.
"It's picking up, definitely getting better," Linton says. "When home appraisals were down, it was difficult. People interested in getting reverse mortgages don't want to hear that their homes aren't worth what they think they are. Now, that is turning around, and the appraisals are even higher than the estimates I am putting down."
With that untapped potential in their homes being revealed, those seeking a reverse mortgage in her region appear to be younger these days than in the past, with many in their late 60s and early 70s, Linton says. She's not seeing as many older clients in their 80s.
"It's people that just need a little more income or maybe want to have some more money to do more things they don't quite have enough money to do without it, like take a vacation - people like cruises," Linton says. "It's a little more money to enjoy their retirement with."
Linton says her focus is to get more financial advisors and real estate agents interested in getting their clients to consider reverse mortgages. That's an untapped market that's going to help the industry grow, she says.
There are many people who don't want to dip into their stock portfolios or investments or want to maximize their Social Security benefits by waiting until they're age 70 to take them, thus increasing their benefits by 32 percent a month. But they might need extra money to get them there - and a reverse mortgage can bridge that gap.
"A line of credit can be a lucrative thing," Linton says. "It's a very good tool for financial advisors to use if they will take the time to study it. They will understand it will not be a detriment to their client but help them. If they have to sell stocks in a down market, why would they want to do that. If they want to take it from an investment, there might be a penalty. With a reverse mortgage, the money is in a line of credit, and they can draw on that instead. It's a better idea."
The other opportunity is getting realtors interested in the concept, Linton says. There's a lot of opportunity, especially in markets like Florida, for people to use a HECM For Purchase, like this couple did to buy their dream home.
"They look at me like I have four heads, mostly because they are uninformed or don't understand now it works," Linton says.
Many people are coming down to Florida after selling their homes in the Midwest or Northeast and have cash to put down, Linton says. Some are choosing to buy a small condo without realizing they can use a reverse mortgage to buy something a lot bigger than they thought they could otherwise. All they have to do is put 50 percent down, and a reverse mortgage will cover the rest without anymore mortgage payments, she says.
"You can have a lot more home than you thought you could. It just makes a lot of sense, but people don't understand how it works," Linton says. "I'm working on changing that."
Federal regulatory changes about the use of reverse mortgages has helped reduce the skepticism and negativity that some people and advisors have had for their use, Linton says. For example, doing a financial assessment on the borrower will help, because about 10 percent of reverse mortgages were going into foreclosure because people couldn't afford to pay their taxes and insurance, Linton says. They were living on Social Security, taking out loans and using up the money.
"They couldn't afford those payments and unfortunately when you have people 70 and 80 years old that you're going to have to foreclose on, that's not a good situation," Linton says. "But now it will be much better that we will know for sure that these people are able to afford to keep up their payments and go forward with their reverse mortgages. It will be a much better situation for them."
see more: http://www.huffingtonpost.com/buck-wargo/sunshine-state-spotlight-_b_7942566.html
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