Reverse mortgages come to co-ops
The good news is that Americans are living longer. But the bad news is that a longer life span translates into Americans needing more money than ever to live out their retirement.
And that is the problem for many seniors wanting to stay in their homes rather than having to sell to access the cash locked in their property. Until recently, reverse mortgages were not available to co-op owners in New Jersey, but now one lender has created a proprietary product that can be applied to co-ops as well as other types of dwellings, such as single family homes and condos.
The reverse mortgage addresses the dilemma faced by people rich with real estate but poor in cash by turning the equity in a senior’s home into available cash that requires no monthly payments, nor does it have to be repaid until the owner sells, leaves the home permanently or dies. No income is needed to qualify, either. The only requirement to be eligible for a reverse mortgage is that the borrower owns his or her home, be 62 years of age and not be delinquent on any federal debt. Loan amounts are calculated based on age and property value. Consumers should know that all reverse mortgages have some type of upfront fees making them more expensive than other mortgage products.
Countrywide launched their product, The Simple Equity, in February. Bryan Fitzpatrick, area sales manager for Countrywide’s Reverse Mortgage based in Englewood Cliffs, says the demand for reverse mortgages has grown steadily year over year. In 2005, the number of reverse mortgages extended nationally by all lenders totaled 43,131. In 2006, that number increased to 76,621. New Jersey ranks sixth in the country in reverse mortgages taken. And, with vast numbers of baby boomers moving into their 60s, this is likely to be just the beginning of the reverse mortgage trend.