Without audience targeting are Google Ads Dead? Think again…
Early this month Google announced new restrictions for targeting specific audiences. The restrictions apply to content related to housing, employment, credit, and those who are disproportionately affected by societal biases. The news of these restrictions created quite a stir among industry brokers and lenders who heavily rely upon targeted Google ad campaigns. All which may have you asking if these changes will kill future reverse mortgage advertising on the world’s most popular search engine. In just a moment we’ll hear from our online SEO expert Josh Johnson to find out.
Google’s restrictions are not necessarily novel nor unexpected. It was just over two years ago Facebook faced scrutiny from federal regulators for allowing those offering credit or housing finance to restrict ad audiences by race or religion among other questionable metrics that would violate HUD’s fair housing rules. An investigation by ProPublica broke this news in October 2016. It was nearly two years later in August 2018 that HUD filed a formal complaint against the social media giant for discriminatory advertising practices. Seven months after HUD’s complaint Facebook announced sweeping changes. Both Facebook and later Google, took a blunt approach much to the chagrin of lenders and service providers.
What ad filters are going away? In its official release Google revealed, “credit products or services can no longer be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”
Is this the end of Google ads for reverse mortgages? To answer that question I reached out to Josh Johnson who heads up Reverse Focus’ Online Dominance SEO program and Google marketing. Here’s his explanation.
Here’s what makes Google unique from other platforms and why reverse mortgage Google ads will continue to reach the intended audience.
To summarize, older homeowners are intentionally seeking out reverse mortgage information on Google which means, yes-your ads will be seen by your target audience, even though you can no longer target specific age groups.
Securing home values against a crash with a reverse
It’s not a stretch to think some reverse mortgage originators may argue that with home values at historic highs and base interest rates below one-percent now is the time for older homeowners to consider securing their home’s value with a reverse mortgage. But is that the best choice? It’s a pivotal question that deserves further examination.
Surging home values could give one a sense of accomplishment and economic security despite the fact that both can be suddenly stripped away- a harsh reality that well-informed homeowners took to heart after the housing crash of 2008. Housing industry experts know that to assume continual home appreciation each year is absurd on its face. Yet, few homeowners have considered the consequences should their home’s values decline, even modestly.
So how can one secure their home’s accumulated equity? Simply put there are three ways:
So how can one secure their home’s accumulated equity? Simply put there are three ways: (1) sell the home, (2) get a cash-out refinance, or (3) obtain a reverse mortgage. HELOCs or home equity lines of credit are not included since lenders can freeze part or all of the credit line should housing or economic conditions deteriorate.
Today, housing economists have a good reason for concern. The Fed is increasing our money supply at alarming levels, the early signs of inflation are becoming increasingly evident, and current home values and future appreciation are contingent upon the successful unwinding of millions of loans in mortgage forbearance. Each individually could force home values down.
Jack Guttentag, a regular Forbes contributor known also as the Mortgage Professor, penned “Reverse Mortgages Are An Excellent Hedge Against Property Value Risk – Especially Now”. In his column, Guttentag gives two hypothetical scenarios, both which assume a home value of $200,000 and the initial interest rate jumping from 2.57% to a maximum of 7.57%. One scenario shows an annual appreciation rate of zero-percent and the other eight. While both provide an identical monthly tenure payment benefit one would obviously leave the borrower with significant remaining equity. One could conclude a reverse mortgage makes perfect sense in such situations.
Before we entertain using a reverse mortgage to secure the home’s value there are several considerations that both the homeowner and originator should ponder. If the home was already mortgage-free would a reverse mortgage’s future equity consumption leave the borrower with no assets if required to move into a skilled-care or assisted living facility? Do they want to leave remaining home equity for their children? Is the homeowner currently itemizing deductions that include paid mortgage interest? If they can easily afford their current mortgage payments would they be willing to accept the cost of a growing loan balance against the uncertain backdrop of interest rates and future appreciation?
Then there’s one particular risk for those who are expecting or dependent upon tenure payments. As monthly tenure payouts would end if they leave the property for skilled care or simply moved, would they have the means to meet their expenses?
Nonetheless, there’s one question that could incentivize a homeowner to take a reverse loan.
What if I have a reverse mortgage and the housing market crashes? The good news is nothing changes unless they sell the property. The bottom line is every opportunity comes with costs- each of which should be carefully explained and considered. Just as homeownership carries unique risks and benefits, so does the loan attached to the property.
Additional Reading | Sources cited: