WASHINGTON, June 21, 2016 /PRNewswire-USNewswire/ -- The National Reverse Mortgage Lenders Association reports today that U.S. homeowners aged 62 and older are holding more than $6 trillion in equity, an increase of $164.9 billion in home equity from the last quarter of 2015.
Largely driven by an estimated $169.7 billion increase in the aggregate value of homes owned by adults aged 62 and older, though offset by a $4.9 billion increase in mortgage debt held by that age group, the gains in equity pushed the NRMLA/RiskSpan Reverse Mortgage Market Index (RMMI) to an all-time high of 209.12 in Q1 2016 from 203.37 in Q4 2015.
"Until recently, it seemed unthinkable that anyone would carry a mortgage into retirement, but today millions of homeowners are still making monthly payments after leaving the workforce," said NRMLA President and CEO Peter Bell. "This is not necessarily a bad thing, but for those looking to accelerate the pay off date, they may want to consider using proceeds from a reverse mortgage loan to satisfy their existing debt. There are some misconceptions that an applicant would need to own their home "free and clear" to qualify for a home equity conversion mortgage (HECM), but this is not the case," said Bell.
Research from Stephanie Moulton, a professor at the John Glenn School of Public Affairs at the Ohio State University, shows that about half of HECM borrowers use some of their loan proceeds to pay off an existing mortgage.
"Homeowners should also be aware that unlike a "forward" mortgage, a reverse mortgage is a non-recourse loan, which means that a borrower will never owe the lender more than the value of the home, even if the loan balance exceeds the home's market value when the loan becomes due and payable," said Bell.
The RMMI is updated quarterly and tracks back to the start of 2000. Release dates for 2016 are:
Q2 2016: 9/27/2016
Q3 2016: 12/20/2016
About Reverse Mortgages
Reverse mortgages are available to homeowners age 62 and older with significant home equity. They are a safe financial tool seniors can use to borrow against the equity in their home without having to make monthly payments as with a traditional "forward" mortgage or a home equity loan. Under a reverse mortgage, funds are advanced to the borrower and interest accrues, but the outstanding balance is not due until the last borrower leaves the home, sells, or passes away.
To date, more than 983,000 senior households have utilized an FHA-insured reverse mortgage. More than 616,000 senior households are currently using a reverse mortgage to help meet their financial needs. For more information, please visit www.ReverseMortgage.org
About the National Reverse Mortgage Lenders Association
The National Reverse Mortgage Lenders Association (NRMLA) is the national voice for the industry and represents the lenders, loan servicers, credit unions, and housing counseling agencies responsible for more than 90 percent of reverse mortgage transactions in the United States. All NRMLA member companies commit themselves to a Code of Ethics & Professional Responsibility. Learn more at www.nrmlaonline.org.
Contact: Jenny Werwa
National Reverse Mortgage Lenders Association
JWerwa@dworbell.com (202) 939-1783
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/americas-seniors-see-home-equity-climb-to-6-trillion-despite-49-billion-increase-in-mortgage-debt-300288096.html
SOURCE National Reverse Mortgage Lenders Association