This is a guest post of Caleb Manscil
Reverse Mortgage Trends
If you search for “reverse mortgage” in Google Trends one will find some interesting bits of information. The majority of searches for reverse loans come from the Sun Belt region (the South and Southwest States in the United States—it’s called the Sun Belt because of the long summers and mild winters). The top ten cities that are searching for reverse loans include Miami, Tampa, Sacramento, Honolulu, Orlando, San Diego, Baltimore, Phoenix, Minneapolis, and Irvine; all but three of the listed cities are located in the Sun Belt region. This tidbit of information is telling about a couple of things in the reverse mortgage industry.
Reverse Mortgages in the Sun Belt Region
So, why are reverse mortgages searched for more from the Sun Belt region as opposed to population centers like New York, Chicago, or Detroit where credit score repair scores higher? We can find the answer to that question in the rules and regulations for reverse mortgages. The first rule for reverse mortgages in the United States is that the borrower must be at least 62 years old. This loan was created originally for retirees that were house rich but cash poor. Reverse loans enable such individuals to use their home equity wealth to pay for health and life conditions that have arisen after becoming house rich. So, regarding that first rule and prerequisite of obtaining a mortgage those that are truly searching and interested in reverse mortgages are likely over or around the age of 62; and where do large populations of those over or around the age of 62 live—within retirement communities in the Sun Belt region.
Another rule or regulation that points to the trending information includes that people must own the majority of their home. Often, when retirees move to their location of choice to stop working they purchase a home outright or at least purchase the majority of their home. Reverse loans are extended to those that have complete or at least majority ownership of their abode. Reverse loans are extended on the owners home equity in the form of a lump sum or multiple payments of some sort. The homeowner doesn’t have to repay until the owner dies, the home is sold, or the owner leaves the home. This type of loan gives the retiree money to use for other things such as living expenses, medical expenses, or to use at their leisure.
Trends Tell a Story
Understanding the trends within an industry is interesting and important for both consumers and producers, but sometimes it’s much harder to understand what’s going on behind the trends. For instance if government grant money searches were trending upward, you can rest assured that the media was covering the topic. With a little bit of trend analysis it’s easier to understand the numbers behind the trends and such is the case regarding the trends of reverse loans.