In some ways, the reverse mortgage has become synonymous with retirement, as financial experts ditch the “loan of last resort” mantra that long defined the financial product, in favor of a more positive description: retirement planning tool.
And recently, the product — and its upcoming Financial Assessment — has been featured in a number of publications, the most recent of which is a Retirement Report published by Kiplinger, a Washington, D.C.-based publisher of business forecasts and personal finance advice.
Kiplinger’s March issue offers a “Guide to a Richer Retirement” and breaks down the Financial Assessment for prospective borrowers, noting that the new “test” will ensure borrowers have enough money to pay ongoing costs associated with the loan.
The publication comes the week of the Financial Assessment’s original March 2 effective date, which was later pushed back to April 27 by the Department of Housing and Urban Development (HUD).
While American Advisors Group tells Kiplinger the assessment is “the biggest change we’ve ever faced in the industry,” the article points to a positive outlook for the new and improved reverse mortgage.
Despite shortcomings some prospective borrowers may face after the Financial Assessment is implemented, there are several ways to still qualify for the loan, including setting money aside for future expenses.
Additionally, the amount of equity in the home can make a difference, Kiplinger writes.
“If somebody comes up short in the assessment, but they have equity in the house, that would count as a resource,” says Peter Bell, president of the National Reverse Mortgage Lenders Association (NRMLA).
Written by Emily Study