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Housing Affordability Crisis holds potential

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FOMO (fear of missing out) and absurdly low interest rates helped create one of the hottest real estate markets seen since World War II. It has also created one of the second worse housing price corrections seen since 1945. 

55% of Americans say they cannot afford to purchase a home in today’s market. Not surprising considering the average borrower today is paying over 7% APR on a 30-year mortgage. This affordability crisis is further exasperated with many homes across the country still priced above their pre-pandemic levels as if interest rates were not twice what they were just one year ago.

Consequently, most would-be homebuyers have decided to sit on the sidelines until home values reflect 2023 realities. Older homeowners, however, may not want to wait a year or two to right-size or move closer to family members. This sense of urgency may be driven in part by one’s age, health, or family situation. The good news is many older homebuyers may not have to wait.

Certainly, the HECM for Purchase or H4P is perhaps one of the most overlooked and underutilized HECM loans in the market. Only 5.5% of September endorsements were for purchase transactions. Knowing this even a surge in purchase loan endorsements would not offset overall volume reductions.

However, for an individual reverse mortgage originator, one closed HECM for Purchase each month could make all the difference in the world. Those who can appreciate one more potential funding per month may want to consider the following.

Local realtors and agents are being hamstrung by today’s high rates and home prices. As a result, any realistic solution that could help them close one more transaction each month is likely to be well-received. Now may be the time to find out which real estate professionals work with older homebuyers or sellers. Rather than being burdened with a bigger mortgage payment than anticipated each month, they could potentially have no required loan payments.

The question is, do your local real estate agents know the H4P could help them close more deals? And more importantly, do they know that you can provide this most unique cash flow-friendly mortgage loan?

 

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Editor in Chief: HECMWorld.com
 
As a prominent commentator and Editor in Chief at HECMWorld.com, Shannon Hicks has played a pivotal role in reshaping the conversation around reverse mortgages. His unique perspectives and deep understanding of the industry have not only educated countless readers but has also contributed to introducing practical strategies utilizing housing wealth with a reverse mortgage.
 
Shannon’s journey into the world of reverse mortgages began in 2002 as an originator and his prior work in the financial services industry. Shannon has been covering reverse mortgage news stories since 2008 when he launched the podcast HECMWorld Weekly. Later, in 2010 he began producing the weekly video series The Industry Leader Update and Friday’s Food for Thought.
 
Readers wishing to submit stories or interview requests can reach our team at: info@hecmworld.com.

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