During the refinancing boom in 2003 and 2004 millions of Baby Boomer homeowners refinanced their mortgages and took out new 15 or 30 year loans. This is problematic because many homeowners in their late 50’s or early 60’s still have big mortgages running for another two or three decades.
How will Boomers with these massive loans be able to pay them off? Will they be forced to sell their homes when their monthly mortgage payments get too high? The Federal Housing Administration says "No".
The FHA has a reverse mortgage loan designed specifically this problem. A reverse mortgage lets homeowners convert equity in their homes into cash payments. The FHA, typically known as a heavily bureaucratic government agency, has turned that perception around and is currently booming.
Last year alone, total Home Equity Conversion Mortgages (the official name for the FHA’s reverse mortgage) jumped 49 percent to almost 72,000. The program has become so popular there is new legislation meant to increase the FHA’s loan limits pending. To find out more about Reverse Mortgages and other types of FHA loans check out our lending guide.