It’s so much more than mortgage payment elimination



How a fixation on mortgage elimination could be costing retirees

Robert and Lisa Brown have been married for 35 years, have nearly paid off their home mortgage, and have over $200,000 in retirement savings. Having been retired for 5 years they can easily pay all of their monthly expenses. Last week they received a mailer touting the benefits of reverse mortgages and how one can stop making their existing mortgage payment. “No thanks”, they said as they tossed it in the kitchen trash.

While this is a hypothetical scenario it exemplifies one possible reason that reverse mortgages may not have gained more market share among age-eligible homeowners in the U.S. The issue? Perhaps it’s selling a benefit that millions of homeowners may not want or even need. While 80% of respondents to our recent HECMWorld survey said eliminating the mortgage payment was the primary motivator in getting the loan, how many households are completely unaware of the myriad of ways a reverse mortgage can be utilized? Most I would venture to say.

In 1992 Apple founder Steve Jobs told Business Week, “A lot of times, people don’t know what they want until you show it to them.” Could such a bold statement hold water in our industry? Well, first consider this. People don’t know what you haven’t told them. Just as Jobs showed people gadgets that no one knew they wanted until he took the stage, many homeowners have no clue how a reverse mortgage could be used to secure their future. And that lack of knowledge can be costly.

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1 comment

Don Opeka April 5, 2021 at 6:16 am

This is why I’m writing a book describing the various ways my borrowers have used Reverse Mortgages. I know many of my borrowers long before and after I close a loan for them. We close loans, including reverse mortgages, for more than one generation of the same family. I will include the story of a family that we closed a forward mortgage and then two reverse mortgages on the same house. It will include the story of closing a forward mortgage for a couple that couldn’t qualify for a HECM. From my perspective as a loan originator for 25 years and 75-year-old HECM borrower, the obvious answer to “Are we selling ourselves short?” is yes.

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