As the economy continues to tread water, the number and popularity of reverse mortgages has skyrocketed 166% over the past few years, according to SmartMoney. The mortgages have been especially popular among older, cash-strapped homeowners.
Part of the surge is due lower upfront origination and service fees, since lenders are desperate for new business. Most are federally insured, so investors tend to consider them a safer bet.
However, there are some drawbacks. Homeowners who take out reverse mortgages rarely get as much money as someone who simply sells the house. And the borrower’s age often factors in to how much can be taken out.
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