Dubbing reverse mortgages “the Rodney Dangerfield of retirement,” CBS MoneyWatch touted the Home Equity Conversion Mortgage program for the second time in a week.
Steve Vernon, a consulting research scholar for the Stanford Center on Longevity at Stanford University, rounded up the recent scholarly research on reverse mortgages for CBS readers, breaking the ice with a reference to the comedian and his catchphrase.
“Aging boomers probably remember Rodney Dangerfield as the comedian who lamented, ‘I don’t get no respect,’” Vernon wrote. “Are reverse mortgages the modern equivalent in the retirement planning world?”
The answer, Vernon concludes, is yes. Citing scholar and HECM cheerleader Wade Pfau’s book, “How to Use Reverse Mortgages to Secure Your Retirement,” walks through the most common misconceptions, starting with the frequent complaint about origination costs.
“Just like conventional mortgages, reverse mortgages have both upfront and closing costs that can be reduced by shopping around for competitive lenders,” Vernon writes. “If a reverse mortgage is the best or only way to buy your retirement freedom, it might be well worth the cost.”
Vernon also points out that reverse mortgages can help prevent older people from having to move in with their adult children, and mentions the recent improvements to the program that have expanded it beyond the pool of “desperate borrowers,” such as mandatory counseling and protections that allow non-borrowing spouses to remain in their homes after the death of their borrowing partner.
The CBS article provides a handy bullet-point list of ways borrowers can benefit from a reverse mortgage from Pfau’s book, such as paying off a conventional mortgage, remodeling their homes to adapt to various aging needs, or deferring Social Security payments until they reach their maximum amounts.
After a standard and wise warning about not taking out a HECM if a borrower intends to leave their homes soon, Vernon concludes on a high note: “If you have substantial home equity, if your financial resources aren’t sufficient to enable you to retire and if you really want to retire, you’d be wise to explore all of your options to deploy your home equity.”
Vernon’s article represents the second plug for reverse mortgages in CBS MoneyWatch in recent days: Reporter Kathy Kristof also extolled the virtues of the program on the site in an article that called the program “smart” for seniors.
Read Vernon’s full article on CBS MoneyWatch here.
Written by Alex Spanko