New reverse mortgage type may be approved
Mortgage lenders are likely to see a boost in business if voters approve a new type of reverse mortgage Nov. 8.
This type of mortgage allows seniors older than 62 to draw a line of credit that is repayable when the home is sold.
"We're not in the predicting business, but that will be a very popular option," said Gary Bauch, who heads the Texas reverse mortgage business at Wells Fargo.
Nationwide, 88 percent of reverse mortgages offered are the line-of-credit type, said Scott Norman, president of the Texas Association of Reverse Mortgage Lenders, who sells for Financial Freedom, a top U.S. lender of reverse mortgage loans.
Texas has become the third-largest market for reverse mortgages in the three years that the option has been available here, Norman said.
Voters have overwhelmingly approved loans that tap home equity, said Brett Ruddell, loan officer at Griffin Financial Mortgage, a Fort Worth-based lender that almost exclusively specializes in reverse mortgages.
Seniors typically use the loans to pay for prescriptions, to fix their house, to pay taxes and insurance or for day-to-day living expenses, lenders say.
"It's their money; they can pretty much do whatever they want with it," Bauch said.
It will be particularly useful for seniors who get Medicaid but do not want the regular payments of a loan to hinder their eligibility, Ruddell said.
-- Andrea Jares
Source: Star Telegram
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