According to the National Reverse Mortgage Lenders Association, the number of federally insured reverse mortgages increased by 77% during the 2006 fiscal year.
For the fiscal year, which ended September 30, a reported 76,351 Home Equity Conversion Mortgages were insured by the Federal Housing Administration (FHA). That number is up significantly from the 43,131 reverse mortgages insured during fiscal year 2005.
"More seniors are recognizing that traditional retirement tools, such as IRAs, pensions and 401(k)s are not providing sufficient income to help fund everyday living expenses and healthcare," explained Peter Bell, president of the National Reverse Mortgage Lenders Association.
"Through proper education, more retirees are recognizing that the home they have lived in for so many years can now take care of them by using a reverse mortgage to access the equity accumulated over 20, 30, 40 years, to help the live more comfortably," said Bell of the increased popularity of the reverse mortgage.
The association said that high home appreciation rates in many parts of the country may be allowing seniors access to greater amounts of equity. They say that education efforts have led to an increased number of consumers accepting reverse mortgage products as a money management method.
The FHA Commissioner, Brian Montgomery, said that he expects reverse mortgages to become as common as 401(k)s as a retirement planning tool. The idea is that your greatest investment can pay you back when you need it.
A recent study by the Mortgage Bankers Association revealed that there has been a 23% decline in the actual dollar amount of reverse mortgages over the past six months. They say that while reverse mortgages are becoming more popular, seniors are taking out less equity on their homes.
Martin Lukac
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