An increasing number of older people are looking to reverse mortgages to boost their cash flow in retirement, according to new figures from a trade group.
The creation of these types of mortgages increased by 4.2 percent during the fiscal year, figures from the National Reverse Mortgage Lenders Association reveal.
Reverse mortgages are available to homeowners over 61 who want to convert some of the equity in their property into cash without selling, giving up the title or remortgaging. Their income from this transaction is tax-free.
The interest in reverse mortgages has been growing over the past several years, with this year’s total of 112,100 setting a new record for loan volume.
Peter Bell, president of the NRMLA, said that the group expects the number of these home loans to grow even higher in the coming years.
"Reverse mortgages are really one of the only positive stories in financial services this year, because they provide a safe, proven solution to many Americans’ retirement funding needs," he explained.
Effective from November 1st, the Department of Housing and Urban Development states that federally insured reverse mortgages have a single national loan limit of $417,000, Reuters reports.