New guidelines allowing older borrowers to use a reverse mortgage to purchase a principal residence went into effect earlier this year.
Previous guidelines had restricted the use of reverse mortgages to real estate transactions that involved refinancing.
Until recently, lenders had been waiting on the sidelines in anticipation of further clarification from the federal government. However, lending activity does appear to be picking-up.
A recent New York Times article provides specific examples of how this transaction works. The article also discusses pros and cons of this new wrinkle in reverse mortgage legislation.
Source: New York Times
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