Seniors Can Now Tap More Equity

Earlier this year HomEquity Bank increased its maximum loan-to-value on a reverse mortgage to 55% (in some cases slightly more). It was a change made with little fanfare, but one that will provide necessary cash to thousands more senior homeowners.

Prior to this change, the bank lent up to one-half of a property’s appraised value. Now, qualified seniors can access at least $20,000 more on a $400,000 property, for example. This money can be a lifeline when an elderly homeowner has immediate expenses (e.g., medical costs), but no other source of liquidity and a need to stay in their home.

“We are rather conservative,” said Yvonne Ziomecki, SVP, HomEquity Bank in response to why the bank hasn’t offered this high of an LTV in the past. “Having 29 years of actuarial history on repayments, etc., gave us comfort to move in that direction.”

The company confirms that these higher lending ratios are here to stay. “We wouldn’t have offered it up if we didn’t believe we can continue offering it,” she explains. Note that qualifying for a 55% LTV reverse mortgage requires that a borrower be more than 75 years of age and have a marketable home in a good location.

Sidebar: HomEquity Bank is getting ready to launch its new “Mortgage Broker Direct” service in September. For the first time, mortgage brokers will be able to submit deals directly to the bank via D+H Expert. The company will offer an official designation for approved brokers called the “Certified Reverse Mortgage Specialist.” Brokers will receive continuing education (CE) credits for completing the certification, specialized marketing support and compensation equal to that of selling a regular five-year fixed mortgage.

  1. I’m glad its a modest conservative increase, which appears to demonstrate a well thought out decision

  2. Reverse mortgages sometimes get a bad rap from financial planners and others, but I think this is a good product and small LTV increase a prudent direction. Homeowners can just as well sell and get 100% of the equity (as did my parents recently), invest the proceeds, and use the interest/capital to pay for seniors’ accommodations. Or those that need the money, get a reverse mortgage and stay put as long as they can take care of the place and themselves. It’s all good.

  3. Our networks (DLC and MCC) have been huge supporters of HomEquity Bank for several years now and find the product very valuable. Over 1000 seniors are turning 65 everyday in this county and often traditional options like refinance and Home equity lines of credit just don’t work for our aging population. This is a good product and a good company. The changes to the maximum LTV are very positive. Once we began office to office individual training on the product, pricing and guidelines, our volume with them skyrocketed.

  4. Having a paid off house gives you so many options in retirement. You will probably get better monetary returns in stocks than real estate but nothing can match can the psychological return of a free and clear house.

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