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Reverse mortgage solutions are gaining attention as rates rise

HousingWire says many older homeowners with significant equity are shifting from HELOC discussions to reverse mortgage options because higher rates can make traditional underwriting harder and avoid another required monthly payment.

Reported · Written up by our desk · Mortgages

HousingWire reports that mortgage originators have long focused on helping consumers buy homes and refinance, but homeowner needs shift after purchase as they build equity and plan for later life.

According to HousingWire, the industry misconception is that older homeowners stop needing financing, when in reality many may need cash for home improvements, healthcare expenses, debt consolidation, purchasing a new home, or supporting family members.

HousingWire notes that as mortgage rates have increased, some reverse mortgage conversations are beginning as HELOC conversations, with borrowers having substantial equity but failing to qualify under traditional income and debt-to-income requirements, or not wanting an additional required monthly mortgage payment.

HousingWire also highlights that reverse home equity solutions differ from traditional home equity loans because they do not require eligible borrowers to make a new monthly mortgage payment, though borrowers must meet obligations such as living in the property as the principal residence and paying property charges and maintaining the home.

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