Baby boomers is the term used to refer to the large growth in population right after the Second World War. As we hit 2016, a large group of the boomers are heading towards retirement and are becoming more and more eligible (in terms of age) for a reverse mortgage loan. As they retire, reverse mortgages are becoming increasingly popular. This is because a large amount of their wealth is built in to home equity.
The main reason this is working is because the boomers need the money. In terms of retirement savings and investments, they show up woefully short. However, a significant amount of wealth lies in the equity of their homes. In most cases, the homeowner does not want to sell the home. This makes reverse mortgages the best option since it does not involve repayment until the homeowner dies or permanently moves out of the home.
While getting a reverse mortgage can be extremely tricky, if used properly it could be one of the best ways to use the home equity. However, it is extremely important for the heirs to understand the reverse mortgage and the fact that once the borrower dies, the family cannot bank on those funds any longer. It will them become the responsibility of the heir to either take up a normal loan to make the payments and keep the house, or just sell it.
With the baby boom after the Second World War, there were a lot of individuals who went on to buy their own homes. This is what makes reverse mortgages for boomers so important. It is just a means of the financially less stable to bank on the equity of their homes and this becomes important for lenders now since the number of boomers entering the eligible age in increasing by the day.