New Research: The Real Story on What to Look for When Considering a Reverse Mortgage

|
Login
Questions? Get On Demand Financial Advice



Reverse mortgages are widely advertised on TV, radio and online. But, are they a good idea for you?  Who can you believe?  And, how do you get good information?

considering a reverse mortgage

A new study from Ohio State University sheds light on these topics.  Researchers recently surveyed 30,000 seniors who received reverse mortgage counseling between 2006 and 2011.

What is Reverse Mortgage Counseling?

Reverse mortgage counseling is a mandatory (it is actually required by federal law) and extraordinarily useful part of securing a reverse mortgage. The counseling is designed to:

  1. Educate you about how reverse mortgages work and to help you decide whether or not the product is a good fit for you.
  2. Help you explore reverse mortgage alternatives.
  3. Provide guidance and resources to help you make the best decision.
  4. Support you throughout the reverse mortgage application process.

Reverse mortgage counselors are trained by the U.S. Department of Housing and Urban Development (HUD).  They are not affiliated with any lender and the counseling sessions are designed to help you. No counselor will ever tell you what you should or should not do.

In fact, if you are at all on the fence about whether a reverse mortgage is right for you or not, this unbiased counseling session can be an excellent way to get clarity and make a good decision.

Learn more in “Your Guide to Reverse Mortgage Counseling.”

How Many People Get a Reverse Mortgage After a Counseling Session?

About 2/3 of the potential reverse mortgage borrowers who received counseling proceeded to get the loan while 1/3 of counseling participants decided against getting a reverse mortgage.  There should be no pressure to proceed with a loan.

Of the few who decided not to get a reverse mortgage, there were a large variety of reasons:

Are Borrowers Happy with their Decision to Get a Reverse Mortgage? And, What Did They Do with Their Money?

Between 77-83% of all reverse mortgage borrowers were satisfied or very satisfied with their decision to get a reverse mortgage.  And, borrowers reported slightly higher overall satisfaction with their lives overall than non borrowers (people who got reverse mortgage counseling, but did not proceed to get the loan).

You are allowed to do absolutely anything you want with your reverse mortgage loan (after you have paid off any other mortgages or liens on your home).  Here is how real life reverse mortgage borrowers used their money (survey respondents could choose up to 3 options):

  • 37% used the money for everyday expenses
  • 37% needed to pay off an existing mortgage (which can dramatically improve your monthly spending)
  • 31% paid off other debt
  • 29% did some home improvements
  • 14% spent on health needs
  • 13% helped family with the money
  • 9% used the money to postpone other retirement income (delay the start of Social Security, retain savings, etc…)
  • 7% made a big purchase
  • 2% bought another property (vacation home, second home, rental property)
  • 14% responded “other”

What Are the Key Things You Learn in Reverse Mortgage Counseling

There are at least three key things you need to learn about when considering a reverse mortgage that are covered in the counseling session:

How Can You Receive Reverse Mortgage Proceeds: After paying off your existing mortgage (if applicable), you have at least 4 ways to receive your reverse mortgage loan amount. You can: get cash, have access to a home equity line of credit, schedule monthly payments or some combination of the above. Get a reverse mortgage estimate to start exploring these different options.

Reverse Mortgage Balances Increase Over Time:  Reverse mortgages are loans.  However, you are not obligated to make any monthly payments.  Instead, for any money that you use from the reverse mortgage, you accumulate interest so the loan amount grows over time. You pay back the loan when you die or permanently move out of the home. When the loan comes due, you owe the value of the loan or the value of the home — whichever is less.

What is Your Responsibility for Taxes and Insurance?: It is very important to remember that even though you will not be making any monthly loan payments, you do need to continue to pay taxes and insurance on your home to avoid default.

Did the Reverse Mortgage Money Last as Long as They Thought it Would?

A key question on the Ohio State survey asked whether the “money from the reverse mortgage lasted longer, shorter or about the same amount of time that the consumer originally anticipated.”

A full seventy three percent of the borrowers felt that the money lasted longer or about the same as they had anticipated.  The reverse mortgage counseling session seems to do a good job of preparing borrowers for how to best use the money and prepare for a secure future.

If you are considering a reverse mortgage, you want to think about what impact it will have on your life?  Find a reverse mortgage lender or get an estimate of your loan amount today and start imaging a better financial future.

Estimate Your Reverse Mortgage Loan Amount

RECOMMENDED FOR YOU

What Happens to a Reverse Mortgage After Death or When a Reverse Mortgage Becomes Due?
Who Wants Reverse Mortgage Information? Why? And, What Can They Get from These Loans?
Reverse Mortgage Facts: 3 Reasons These Loans Are Growing in Popularity
Forget the Heirs — I Need Money Now: 1/3 of Reverse Mortgage Borrowers Are Unconcerned About Leaving a Legacy


New Reverse Mortgage Calculator: How to Assess Your Suitability for these Loans
The New Retirement Plan That Banks Don’t Want Seniors Knowing
3 Underreported Facts about Reverse Mortgages
Reverse Mortgage Disadvantages and Advantages: Your Guide to Reverse Mortgage Pros and Cons
What is a Reverse Mortgage? Who is Behind these Loans?

More Popular Reverse Mortgage Articles….

reverse mortgagedecision to get a reverse mortgagewhat is a reverse mortgage and how does it work?reverse mortgage trade offsreverse mortgage calculations
More Recent Reverse Mortgage Articles….

Is a Reverse Mortgage Right for You?

Take our 1-minute Suitability Test

Got questions? Our reverse mortgage specialists are standing by.

must be 10 digits

We respect your privacy.
Only NewRetirement will contact you.

   About NewRetirement.com
|
Privacy Policy
|
Terms of Use
|
Contact Us
|
Other Resources
|
For Professionals
|
NewRetirement Blogs
|
Site Map

Send this to a friend

About Skype

Check Also

Open Wide! Pursue Dental Care Before You Retire

Your pre-retirement checklist probably includes tasks such as signing up for Medicare, creating a budget …

Leave a Reply

Your email address will not be published. Required fields are marked *