Reverse Mortgages – Rethinking the Typical Borrower

In the past, reverse mortgages were commonly perceived as a loan of last resort used by homeowners who were struggling financially. However, that misconception is quickly dissipating as more and more financial planners and retirement advisors have begun recommending reverse mortgages as part of a comprehensive retirement strategy. As a result, the profile of a typical reverse mortgage borrower is becoming much more diverse. Two new borrower profiles which are becoming more prevalent are the “mass affluent” and “downsizers.”

The mass affluent are individuals whose net worth is $750,000-$2 million at the time they retire.2 Their retirement accounts consist of diversified investment portfolios that they will draw from as needed. These individuals use reverse mortgages as a tool to maximize their retirement accounts. The real estate market is much less volatile than the stock market. By setting up a reverse mortgage early in retirement, borrowers are able to draw from their home’s equity instead of their 401(k) plans or IRAs in times of low investment returns.3 So, when the stock market is yielding low returns, these retirees use the money from their reverse mortgages to live off of while allowing their investment portfolios to recover. This strategy allows the mass affluent to prolong the life of their retirement savings by further diversifying their investment portfolio.

Downsizers are individuals who have paid off most or all of the balance on their homes and are now sitting on a large sum of home equity. For reasons such as simplifying general home upkeep or moving closer to relatives, downsizers wish to sell their current home and purchase a smaller one. By using a reverse mortgage when financing their new home, downsizers can avoid having to pay monthly mortgage payments.1 Not having a monthly mortgage payment may allow them to live a more comfortable lifestyle by preserving their savings and improving their cash flow.

Reverse mortgages have a wide range of uses that many different types of senior homeowners can benefit from. In 2016 there were nearly 50,000 reverse mortgages issued in the United States, totaling $9 billion in reverse financing.4 Whether you are looking to improve your cash flow, downsize or right size into a new home, or supplement your retirement portfolio, a reverse mortgage may be able to help you achieve your financial goals.

To learn more about how a reverse mortgage can help maximize and extend the life of your retirement savings, contact a licensed loan advisor at 1 (800)976-6211 or click here  to request a no-obligation eligibility assessment.

Important Disclosures:
1 You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.

2 Huffington Post, When Even Wealthy Homeowners Are Using Reverse Mortgages, The Question Is: Why Aren’t You?

3 Now it Counts, Financial Planners Take a Look at Reverse Mortgages,

4 Reverse Mortgage Statistics, Reverse Mortgage Statistics and Data