Using a Reverse Mortgage for Changing Retirement Plans
The reverse mortgage is still a viable option for seniors hoping to pay off their mortgage and continue to live debt free during retirement, but very few take advantage of it.
In fact, according to a nationwide survey, presented at the National Reverse Mortgage Lenders Association by Dan Gorin, only 2% of seniors 62 years of age and older actually get a reverse mortgage.
This means less than half of those who consider a reverse mortgage in the first place are actually getting one.
Considering the reputation the reverse mortgage has had until recently (and probably still does) these numbers aren’t particularly surprising, however, this does mean that there is plenty of work still to be done where the reverse mortgage is concerned.
Known primarily as ” a loan of last resort,” many seniors possibly looked into the reverse mortgage whenever they found themselves accumulating more debt than they could pay off or had an outstanding financial crisis.
If that crisis were to be resolved , they no longer considered a reverse mortgage (even if it would still be beneficial for long term retirement planning). Those who were unable to resolve their issues, went ahead with their plans; this accounts for the 2% of senior homeowners who got a reverse mortgage.
Luckily, this may be changing in the future.
The results of the survey, which included additional information from 300 surveys, found that there are shifting behaviors around America regarding effective debt management and retirement planning:
“Coming out of the last recession and housing crisis, household debt is a growing problem. More people are holding mortgage debt as well as student loan debt later in life while homeownership rates are down.”
Gorin also reported that, while many people used to stay in the workforce because they loved what they do, the number of people who have stayed in the workforce out of pure need has grown. This spells troubling news for older Americans who had hoped to retire but have now found themselves in an even deeper hole than before.
The previously unfair misconceptions about the reverse mortgage program may have prevented many from getting the program in the past…hopefully this will no longer be the case.
In addition, marketing and consumer exposure to the reverse mortgage program may only be growing considering the amount of consumers surveyed which had already heard of the reverse mortgage one way or another.
- At the top of the list was advertising with 60% people surveyed having seen or heard some form of advertising.
- Another 25% have heard about the program through research.
- Another 20% had heard about the reverse mortgage through suggestions from friends or family.
The amount of people who heard about the reverse mortgage from a financial advisor was down to 6% while 20% stated that they had been approached by someone trying to sell a reverse mortgage.
It’s clear that, even though financial advisors may be the future, they have yet to be integrated fully into retirement plans. There’s still plenty of room for improvement and growth, the future of the reverse mortgage program (as a long-term retirement planning tool) looks brighter every day.
Be aware that while you cannot lose your home under normal circumstances, foreclosure may occur if you do not pay your taxes and insurance and otherwise comply with the loan terms.
Interested in a reverse mortgage or simply want more information? Give PS Financial Services a call at (888) 845-6630 or via email at info@PSReverseMortgage.com. We don’t pressure those who inquire. We are simply here to help.