To many, reverse mortgages are a bit of a mystery. My goal is to provide some insight into the many uses and benefits of a reverse mortgage. It could be used for additional monthly income, paying off debt or being able to pay for medical costs. Perhaps you can take the dream vacation you’ve always imagined or help pay for your grandchildren’s education. There are many possibilities with a reverse mortgage.
Reverse Mortgage Basics- How Much Can I Borrow?
The available balance on a reverse mortgage is based on two factors:
1) The value of the home
2) The age of the youngest borrower
Basically the older you are, the more access you’ll get to the equity in your home. At 62, you may have access to about 50% of your home’s value. At 82, you may have access to about 70% of your home’s value. It’s easily calculated with an estimate of your home’s value and your date of birth. Yes, it’s that easy.
What’s Driving Up Home Prices?
In a recent survey posted by Pulsenomics.com, consumers were asked what is driving up home prices. Their answers:
- 50% said low inventory
- 20% said low mortgage rates
- 17% said economic growth
- 13% said high demand and other
So what I take from this is the current increase in home price isn’t due to the economy getting better but a result of low interest rates and lack of homes for sale. As inventory grows and rates rise to “normal” levels, how is that going to affect consumers’ views toward the housing market and actual home prices?