Part 2: State of the 'reverse' market
Under a "HECM for Purchase" program authorized by Congress in 2008, seniors can buy a house and take out a reverse mortgage on that house at the same time. Absent this program, the senior would have had to purchase the new house with a forward mortgage, then take out an HECM to retire the forward mortgage, incurring two sets of settlement costs in the process. With the fixed-rate HECM, the senior incurs only one set of settlement costs.
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.
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