Since the most recent changes to the Federal Reverse Mortgage program went into effect in October 2017, Reverse Mortgage counselors have witnessed another change: the reason borrowers seek counseling for the program: retirement security.
After the first two to three months of the lower principal limit factors taking effect, Cambridge Credit Counseling Corp. noticed that there were more needs-based inquiries nationwide than ever before. However, according to Reverse Mortgage Counseling Supervisor, Justin Lally, that is changing! He stated that “we are seeing an increase in those potential borrowers applying for a Reverse Mortgage as a way to supplement their overall retirement plan.”
Various lenders and Reverse Mortgage professionals also chimed in with their observations of the types of borrowers applying for the program. Recently at the nationwide counseling organization Navicore Solutions, Rich Verillo, Senior Housing Partnerships Manager, stated that he is seeing the same mix of needs-based borrowers versus wealthier borrowers since October. However, out of the needs-based borrowers, fewer want a Reverse Mortgage to pay off an existing mortgage, which shows that some borrowers are turning to the Reverse Mortgage for the extra financial cushion that it can provide.
Verrillo continued that “the profile of the borrower has not changed, but most of the borrowers we are seeing either have no mortgage or an existing low mortgage. Colden Ray, a homeownership counselor at Belmont Housing Resources, stated that the only change she and colleagues have noticed is fewer borrowers looking for a mortgage payoff. She remarked, “at this point, we see the same kind of demographics. Honestly, it is probably a pretty similar mix of higher income and lower income.”
What is responsible for the increased change in borrowers’ needs for the Reverse Mortgage program? In short, a lot of it has to do with limited income and the possibility of outliving retirement savings. Although most senior homeowners may not be aware that they are sitting on another bucket of money from the value of their homes, most seniors want to have the financial security that can be obtained by diversifying their income streams and assets.
Although paying off the mortgage is a requirement for borrowers, there will be some who need to free up their monthly mortgage obligation to have more funds to work with each month. On the other hand, some borrowers just need another pool of income for emergencies, home repairs, or medical issues that could potentially arise. The great thing about the Reverse Mortgage program is that even though the Federal Government highly regulates it, it is entirely customizable for the borrower’s unique needs.
Have you been considering how a Reverse Mortgage could supplement your retirement income? If so, Reverse Mortgage Answers is here to assist you with any of your questions happily. A member of our team is available to walk you through the process at 1-800-420-5515. With our expertise and in-depth knowledge of the program, you will work with the right company to improve the quality of your retirement.