Two Controversial Mortgage Products Agents Should Know About

Two Controversial Mortgage Products Agents Should Know About

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Two Controversial Mortgage Products Agents Should Know About

Posted: 16 Jan 2014 04:00 AM PST

Today we are pleased to welcome back Nikki Buckelew as our guest blogger.  Nikki is the Founder and CEO of the Seniors Real Estate Institute.
We already know from NAR that 1 in 4 home sales in 2012 involved a seller over the age of 65. It’s also no secret that the aging population is growing rapidly, creating the commonly referred to “Senior Tsunami.”
With this massive demographic shift and impending related changes in the real estate market, agents have little choice but to expand their knowledge base in order to better serve this aging clientele and the buyers of their homes.

Reverse Mortgages

There seems to be a lot of curiosity (and skepticism) these days around the reverse mortgage products on the market and whether or not agents should familiarize themselves with them.
Of course, we have all seen the infomercials featuring Fred Thompson, Henry Winkler, and others touting the many virtues of the Reverse Mortgage for older homeowners, but why should real estate professionals learn about them?

1. Not only can seniors over the age of 62 use a reverse mortgage to access the equity in their current residence, in most U.S. states, they can also use the reverse mortgage to purchase a new home. This presents savvy agents specializing in the seniors’ niche with a unique value proposition and tool to list and sell more homes.
2. As older adults with current reverse mortgages (many now in their 80’s and 90’s) are taking advantage of the up-tick in the market and liquidating their primary residence in search of senior living communities, their agent will be looked upon as their guide and expected to assist in navigating the reverse mortgage payoff.
3. Because many older adults choose to age-in-place as long as they can, they often use reverse mortgages to make necessary home modifications. While some agents have a tendency to fall short at follow up during the sometimes extended sales cycle, those who introduce their senior adult clients to the reverse mortgage product are often appreciated and thus called upon first when it is time for the homeowner to make a move.

FHA 203K Loans

This loan is one that a lot of agents we talk to seem to avoid. Maybe it’s because these loans can require a bit more effort to process, or it could be because they have just not taken the time to research the benefits of using them.
Here are a few reasons why agents may want to pay attention to this otherwise obscure FHA offering in the coming year.

1. As our population ages and more entry-level homes hit the market, needing repair and updating, this loan is only going to increase in popularity.
2. Because first time homebuyers often need to use the more affordable FHA loan products to purchase a home; older homes, needing repairs and updating, are filtered out of the home search.  Agents familiar with the FHA 203K can increase the pool of available listings for entry-level buyers.
3. Senior home sellers are more apt to choose the “as-is” listing option instead of making costly foundation, roof, wiring, or mechanical repairs. By promoting the FHA 203K loan option to qualified buyers, agents increase their pool of potential buyers for such homes.

Reverse mortgages and FHA 203K loans are just like any other financial product: they are neither good nor bad. Their use depends upon the market and each client’s unique circumstances.
By becoming familiar with the market and the best uses for each type of loan, savvy agents can access an otherwise untapped market and carve out a niche that adds sales to their bottom line.
Be sure to consult with your local real estate broker or mortgage lender about any questions you may have concerning reverse mortgages and FHA 203K loans.