The oldest millennials will not qualify for a Home Equity Conversion Mortgage (HECM) until 2043 at the earliest, but with many having baby boomer parents, any discussion about what happens with a millennial’s childhood home is bound to attract attention.
That’s what happened in a brief column exploring the topic of reverse mortgages from finance columnist Lillian Stone for Money Scoop, part of the Morning Brew line of newsletters owned by Insider.
“Have you checked on the boomers in your life recently? Mine are my parents, and they’re golfing to the point of excess and letting their dogs drink from their coffee mugs,” the column reads. “They’ve also discussed downsizing and selling my childhood home, unlike other members of their generation, who are joining the reverse mortgage party to stay in their homes throughout retirement.”
The column also characterizes reverse mortgages as a “popular option for older adults,” providing a brief explainer of some of the attributes that would qualify someone for a HECM.
“It’s essentially borrowing money against the value of a home, meaning that interest and fees are added to the loan balance over time,” the column reads. “And the longer the borrower stays in the home, the more they owe to the lender since they aren’t making monthly payments. Eventually, the homeowners will have to pay back the loan—often by selling the home.”
A few specific details about the arrangement is absent, such as a borrower’s ability to make monthly payments if they so choose. However, the column also takes a more generally open approach to the product category compared with other literature about it at other publications.
“Overall, a reverse mortgage can be a good strategy for savvy seniors who plan to stay in their homes for the long term,” Stone writes. “One big caveat, though: If, say, your parents were to get a reverse mortgage and didn’t repay it before they died, guess who’d be on the hook? Their next of kin.”
While the column does mention that the loan is often repaid by selling the property, it did not go into other details about repayment including some having the option to provide a deed-in-lieu of foreclosure. Still, the brief explainer of a reverse mortgage and its product features that offers generally neutral information about the product could be indicative of progress being made on the reputational front of the industry, which has been a pronounced concern among industry professionals for years.
Read the column at Money Scoop.