Reverse mortgages will become an integral part of peoples’ retirement income plans, predicts a lender in a recent Financial Advisor article.
Along with savings, pensions, and Social Security, home equity conversion mortgages (HECMs) will have a role as the fourth leg of the retirement income stool, but financial planners need to be educated on the product, says Colin Cushman, CEO of Atlanta-based Generation Mortgage.
“A lot of advisors do not know much about reverse mortgages, so they shy away from them,” Cushman told Financial Advisor.
Reverse mortgages have different uses depending on each borrower’s situation, and they’re not just a loan of last resort: they can be a financial planning tool and can help keep people in their homes.
“The future of reverse mortgages is absolutely terrific,” says Cushman. “Approximately 80 percent of seniors say they want to age in place, and about half are considering using their home equity to help fund retirement. At this point, there are 24 million households with residents age 62 or older, and half of those hold more than 50 percent of their net worth in home equity. In short, the market is enormous.”
In recent months, the Federal Housing Administration has announced several changes to the HECM program aimed at making the product safer for all parties involved.
“As with any mortgage product, there is risk to financing a loan, but we have made, and continue to make, significant efforts to mitigate that risk,” Melanie Roussell, a Department of Housing and Urban Development spokesperson, told Financial Advisor.
With the U.S. population rapidly aging but with fewer retirement resources, knowledge about the reverse mortgage product is expected to grow.
“We are getting more calls from financial advisors who want to know the details,” Cushman said. “Many do not understand the market well enough and neither does the consumer. The baby boomer generation is massive and many have not saved enough, so they are looking for options.”
Read the full article at Financial Advisor .
Written by Alyssa Gerace
