An in-depth study conducted by Ohio State university shows that 78% of borrowers identified themselves as being either “satisfied” or “very satisfied” with their decision to get a home equity conversion mortgage, otherwise known as the reverse mortgage. 76% indicated that the reverse mortgage had made their lives better. The study was conducted using 1,761 HECM borrowers. Participants that took part in the study were those that had completed the mandatory HECM counseling session.
HECM counseling is required by the FHA for everyone involved in the reverse mortgage transaction prior to the bank closing on the loan. In some states, such as California, HECM counseling must take place before a lender can even send an application to someone interested in the HECM. Counseling is performed by a third-party, FHA certified counselor and is designed to ensure prospective borrowers have been informed of closing costs and other important information regarding the HECM transaction.
Of the 1,761 participants, 6% cancelled the processing of their loan before it closed and 76% went through to closing. Participants were one-third female and had an average age of 70 years old.
42% of people said they wanted the reverse mortgage to supplement income and 32% simply wanted to use the loan to pay off their existing mortgage. Of those that wanted the money for other purposes, the study revealed 19% of participants helped out family members with the additional funds and 24% made home improvements. 16% were able to suspend using their retirement funds for an additional period allowing for higher social security payments and longer interest accrual on retirement accounts.
Real estate experts indicate trillions of dollars in untapped real estate wealth in the United States. Senior homeowners are taking advantage of that wealth more and more using the FHA insured reverse mortgage program. Additionally, the vast majority of homeowners are indicating satisfaction with their decision.