Why so many don’t consider a reverse mortgage.…
“The numbers are worrisome. The typical 54- to 64-year-old with a 401(k) or IRA owns a median portfolio worth about $135,000 and more than a quarter of workers don’t have retirement savings accounts”, writes Chris Farrell in his column Is This a Good Time to Get a Reverse Mortgage in Next Avenue.
Considering the stark figures Farrell just cited the word ‘yes’ comes to mind. And the fact that homeownership for households 65 and older has risen to 81% according to the Harvard Joint Center for Housing Studies, would further bolster the argument that now is the time for many to at least look into a reverse mortgage. But many may not. It’s complicated. Laurence Kotlikoff, a Boston University economics professor and expert on personal finance and retirement planning explains. “I went from not liking them to thinking they aren’t as bad as I thought”.
So why are reverse mortgages not going mainstream, as many of us in our industry have hoped? Kotlikoff puts it this way. “I looked more carefully with our software, and it got me back to not thinking favorably about reverse mortgages,
1 comment
Great topic Shannon. I really have a hard time with this issue. I would say its an industry issue and the way we present the product. Why do we make it so complicated? It’s not a complicated product unless it’s presented that way. The reality is, its just a HELOC (assuming you dont use a fixed rate product) with options on how the borrower wants to take distributions from the line of credit. Most borrowers, Financial Planners, Realtors and Economists are familiar with a HELOC and in fact recommend the product to many retirees for the same reason we recommend the HECM. BUT, as we all know the HECM has so many more benefits and protections than what a traditional HELOC offers.
So, how do we as an industry un-complicate the product and presentation?