While we spend a lot of time at RMD talking to industry professionals and covering topics relating to the business of reverse mortgages, we don’t often get to relay the perceptions of the people who matter most in the reverse mortgage world: borrowers.
But this week, during the National Reverse Mortgage Lenders Association western regional meeting in Huntington Beach, we had the rare opportunity of hearing from borrowers firsthand.
NRMLA compiled a panel of four recent borrowers to share their experiences relating to the reverse mortgage process and outcomes. By and large they were very happy with their loans, although several had initial reservations before becoming borrowers.
From diversifying cash flow options to paying for health care costs after a job loss, borrowers also had several different reasons for considering reverse mortgages in the first place.
While the four borrowers interviewed all said the loan ultimately gave them peace of mind, they were not immediately sold on the option. One borrower, Donna, a former wealth management professional, had sold her book of clients in order to attend to health care needs. With a false start upon reentering the workforce, she did not want to take a reverse mortgage, but knew it was an option.
“I didn’t want to do one, and hoped I wouldn’t have to do one, but was in a major life transition and it was one of those things where it was the right thing to do,” she said.
Another borrower, Leo, said he had been curious about reverse mortgages prior to applying, but did not see a need for one. Later, he was laid off from his longtime job, and needed resources to help pay for COBRA until the time when he could qualify for Medicare.
“I needed the financial strength of a reverse mortgage,” he said.
While borrowers reported the process could be overwhelming at times, they praised the experience of their loan originators whom they worked with along the way.
“It was overwhelming,” Leo said. “There is a level of trust that you just have to press forward.
The government endorsement of reverse mortgages was one point of reassurance for a third borrower, Randy.
“It’s approved by the government, and to have something pay you back on a monthly basis is a good feeling. I love it,” he said.
Peace of mind
Ultimately, all of the borrowers reported feeling peace of mind once having obtained their reverse mortgages.
For Donna, she did not want to tap further into her nest egg and did not want to move from her home. For Randy, he was able to allow investments to continue to grow while still having the cash flow to meet ongoing needs. Leo was able to extract even more home equity via a refinancing of his loan after his home appreciated during the economic recovery.
A fourth borrower, Dennis, was able to gain peace of mind for himself and for his family, because he was able to give up working around the clock and on a rigorous travel schedule following recovery from health complications.
“It has worked wonderfully,” Dennis, a former real estate professional, said. “It’s a fantastic financial tool if people know the value of it. There are some injustices being done by not telling people this is available.”
Following the loan closing, Donna said, despite her initial hesitation, she experienced less stress and felt she was able to achieve a fresh start.
After I went through it, there was so much stress off me to not have the monthly mortgage payment so I could square away my career direction,” she said. “I am very glad I have it.”
Written by Elizabeth Ecker