Online mortgage broker LendingTree took a deep dive into reverse mortgages this week, touting the potential benefits of the products but also describing Home Equity Conversion Mortgages as a “last resort.”
The company quoted both industry leaders — including National Reverse Mortgage Lenders Association executive vice president Steve Irwin and American College of Financial Services professor Jamie Hopkins — who offered a supportive, if measured, take on the use of reverse mortgages in retirement.
“This is a really flexible product, and it can be tailored to meed individuals’ needs and wants,” Irwin told LendingTree, which noted that seniors can put HECM proceeds toward long-term medical costs or a new “right-size” home in which to age in place.
Hopkins, meanwhile, emphasized the importance of talking to one’s children to determine whether they want to inherit the home before taking out a reverse mortgage.
“It’s important to distinguish between your legacy value and the property, [Hopkins] added,” Lending Tree observed. “A borrower whose priority is leaving as much money as possible to their heirs might choose to take a reverse mortgage so they can draw less on their 401(k) or other savings accounts.”
The piece also quoted Julie Schoen, deputy director for the University of Southern California’s National Center for Excellence on Elder Abuse, who warned seniors against dealing with lenders who cold-call potential borrowers. She instead suggested they consult with family members, and take a more proactive approach when considering a HECM.
“This should be something that you’re in the driver’s seat, you’re pursuing,” Schoen told LendingTree.
She also referred to reverse mortgages as “a last resort,” recommending that seniors look into traditional home equity loans or simply downsize into a smaller property. Irwin pushed back, saying that HECMs “can be a healthy part of retirement planning,” but should be entered into with a full appraisal of the borrowers’ ongoing needs.
“Are there questions some applicants may have that they want to make sure get covered? Are there some concerns or trepidation they need to talk through with the independent counselor? They should not hesitate to walk through all of that with their counselor,” Irwin told the company.
Check out the full breakdown of reverse mortgages at LendingTree.
Written by Alex Spanko