Is a Reverse Mortgage
A Good Option for You?
by Terri Cullen
From The Wall Street Journal Online
November 01, 2006
The number of federally insured reverse mortgages jumped 77% to 76,351 from 43,131 in fiscal 2006, according to the National Reverse Mortgage Lenders Association. With a reverse mortgage, homeowners 62 and older can borrow against their home equity, and the loan isn't repaid until the homeowner moves or dies. (Learn more about reverse mortgages here.)
|
Piggy Bank To Tap Into For Your Retirement |
WHAT TO DO:
Reverse mortgages sound good, but you may not be able to borrow as much as you
think. Use this
calculator to see how much you can borrow, based on your age, your home's value and
prevailing interest rates. Now factor in costs: Homeowners may pay a fee of up
to 8% of the value of their homes. Of that, 2% goes to government to insure the
mortgage, 1% to 2% goes to the lender and the rest pays for closing costs. If
it's likely you'll need to sell the home in the near term due to financial
hardship or illness, a reverse mortgage may not be worth the cost. Instead,
consider downsizing to a less-expensive home to free up your equity.
Going in Reverse
Locations with the greatest number of reverse mortgages originated in fiscal
2006.
| Location | 2006 | 2005 | % Change |
| Santa Ana, Calif. | 5,825 | 3,067 | 89.9% |
| Los Angeles, Calif. | 5,758 | 3,915 | 47.1% |
| Sacramento, Calif. | 3,625 | 2,161 | 67.7% |
| Coral Gables, Fla. | 3,577 | 1,387 | 157.9% |
| San Francisco, Calif. | 3,353 | 2,040 | 64.4% |
| New York City, N.Y. | 2,492 | 1,454 | 71.4% |
| Fresno, Calif. | 2,461 | 942 | 161.3% |
| Phoenix, Ariz. | 2,438 | 720 | 238.6% |
| Boston, Mass. | 2,263 | 1,148 | 97.1% |
| Denver, Colo. | 1,947 | 1,515 | 28.5% |
Source: The National Reverse Mortgage Lenders Association.
Email your comments to rjeditor@dowjones.com.
