Financial planning tools and services to put you on the path to the future you want
Your guide to financial planning and retirement
Connect with peers and experts
Get to know the people behind the company and the mission behind the work
Offer financial wellness to the people at the heart of your business
September 2, 2017
A new study from Ohio State University sheds light on these topics. Researchers recently surveyed 30,000 seniors who received reverse mortgage counseling between 2006 and 2011.
Reverse mortgage counseling is a mandatory (it is actually required by federal law) and extraordinarily useful part of securing a reverse mortgage. The counseling is designed to:
Reverse mortgage counselors are trained by the U.S. Department of Housing and Urban Development (HUD). They are not affiliated with any lender and the counseling sessions are designed to help you. No counselor will ever tell you what you should or should not do.
In fact, if you are at all on the fence about whether a reverse mortgage is right for you or not, this unbiased counseling session can be an excellent way to get clarity and make a good decision.
Learn more in “Your Guide to Reverse Mortgage Counseling.”
About 2/3 of the potential reverse mortgage borrowers who received counseling proceeded to get the loan while 1/3 of counseling participants decided against getting a reverse mortgage. There should be no pressure to proceed with a loan.
Of the few who decided not to get a reverse mortgage, there were a large variety of reasons:
Between 77-83% of all reverse mortgage borrowers were satisfied or very satisfied with their decision to get a reverse mortgage. And, borrowers reported slightly higher overall satisfaction with their lives overall than non borrowers (people who got reverse mortgage counseling, but did not proceed to get the loan).
You are allowed to do absolutely anything you want with your reverse mortgage loan (after you have paid off any other mortgages or liens on your home). Here is how real life reverse mortgage borrowers used their money (survey respondents could choose up to 3 options):
There are at least three key things you need to learn about when considering a reverse mortgage that are covered in the counseling session:
How Can You Receive Reverse Mortgage Proceeds: After paying off your existing mortgage (if applicable), you have at least 4 ways to receive your reverse mortgage loan amount. You can: get cash, have access to a home equity line of credit, schedule monthly payments or some combination of the above. Get a reverse mortgage estimate to start exploring these different options.
Reverse Mortgage Balances Increase Over Time: Reverse mortgages are loans. However, you are not obligated to make any monthly payments. Instead, for any money that you use from the reverse mortgage, you accumulate interest so the loan amount grows over time. You pay back the loan when you die or permanently move out of the home. When the loan comes due, you owe the value of the loan or the value of the home — whichever is less.
What is Your Responsibility for Taxes and Insurance?: It is very important to remember that even though you will not be making any monthly loan payments, you do need to continue to pay taxes and insurance on your home to avoid default.
A key question on the Ohio State survey asked whether the “money from the reverse mortgage lasted longer, shorter or about the same amount of time that the consumer originally anticipated.”
A full seventy three percent of the borrowers felt that the money lasted longer or about the same as they had anticipated. The reverse mortgage counseling session seems to do a good job of preparing borrowers for how to best use the money and prepare for a secure future.
If you are considering a reverse mortgage, you want to think about what impact it will have on your life? Find a reverse mortgage lender or get an estimate of your loan amount today and start imaging a better financial future.
Share this post:
Our weekly newsletter full of inspiration, podcasts, trends and news.
© 2023 NewRetirement, Inc. All rights reserved.
Disclaimer: The content, calculators, and tools on NewRetirement.com are for informational and educational purposes
only and are not investment advice. They apply financial concepts in a general manner and include
hypotheticals based on information you provide. For retirement planning, you should consider other
assets, income, and investments such as equity in a home or savings accounts in addition to your
retirement savings in an IRA or qualified plan such as a 401(k). Among other things, NewRetirement
provides you with a way to estimate your future retirement income needs and assess the impact of
different scenarios on retirement income. NewRetirement Planner and PlannerPlus are tools that
individuals can use on their own behalf to help think through their future plans, but should not be
acted upon as a complete financial plan. We strongly recommend that you seek the advice of a financial
services professional who has a fiduciary relationship with you before making any type of investment or
significant financial decision. NewRetirement strives to keep its information and tools accurate and up
to date. The information presented is based on objective analysis, but it may not be the same that you
find on a particular financial institution, service provider or specific product's site. All content,
tools, financial products, calculations, estimates, forecasts, comparison shopping products and services
are presented without warranty.