Respected publications such as “Financial Planning” are releasing favorable opinions of the reverse mortgage (Source). While this is not surprising, most financial planners are still not talking to their senior clients about the program. There is ample information available, but a lack of updated information regarding the reverse mortgage getting to financial planners.
Over the last two years, updates were made by the federal government regarding the way lenders can originate and service reverse mortgages. While reverse mortgage lenders are aware of the changes, informing financial planners of updates has proven to be a challenge. There is a fine line for reverse mortgage lenders between passing on updated information and coercing financial planners. That fine line is what makes it out to be a tougher task than one might think.
However, with new guidelines comes new benefits – and new protections – for homeowners and their families. Respected homeowner advocate and economist Martin Andelman stated “Reverse mortgages are a real good thing for your cash. I’ve seen few things in my life as misunderstood or poorly understood as reverse mortgages, and the more I’ve learned about them, the more impressed I’ve become. In fact, I’ve come to like them so much that at 52, I’m almost looking forward to being ten years older so I can qualify” (Source)
A study of homeowners with a reverse mortgage was recently held. Of the 1,761 participants most, a whopping 76%, went through to closing. Only 6% cancelled the processing of their loan before it closed. That means that only a small group cancelled the transaction after being given all of the information on reverse mortgages. Participants were one-third female and had an average age of 70 years old.
With repayment terms being the most flexible of any loan ever in history, the reverse mortgage is a viable option for seniors, regardless of their current financial situation. Financial planners cannot continue to ignore a program as important as the reverse mortgage either. The benefits for them is undeniable, but the benefits for their clients may mean the difference between a comfortable retirement..