Reverse mortgages an option for seniors feeling stuck in retirement

Retirement expert Mark Miller tells MarketWatch that reverse mortgages could be a potential path forward for seniors feeling insecure about retirement

Reverse mortgages could be an option for seniors who feel like they’re “stuck” in retirement. However, they may not consider this option due to the hurdles that many assume will come with tapping home equity, according to retirement expert Mark Miller, who was featured in an article on MarketWatch.

In the article, Miller names home equity tapping as an option for seniors — one that remains largely underutilized. Home equity is “an overlooked financial resource in retirement,” according to Miller, due in part to the potential hurdles involved in tapping equity — including with a reverse mortgage.

“Many retirees don’t want to sell their homes and move or go through the process of getting a home-equity line of credit, loan or a reverse mortgage,” the article states.

While Miller said he’s not “enamored of reverse mortgages, though, because they are ‘another example of an extremely complicated product,'” he notes that the product could have value for seniors who find themselves in difficult financial positions.

“[F]or somebody in a financial pinch, value can be extracted by moving to a less expensive home or a less expensive venue,” Miller said — or by a home-equity line of credit, loan or a reverse mortgage.

Miller is not the only financial expert who has voiced that sentiment. In recent commentary published on RMD, former Finance of America Reverse marketing director Steven Cooley noted that the complexity of reverse mortgages is a barrier to wider adoption of the product.

“[The reverse mortgage] cannot be a loan that is a riddle, wrapped in a mystery, inside an enigma,” Cooley wrote. “Instead, the reverse mortgage product must be understood in one glance. It must instill pride in the recipient, and seniors must believe they deserve it. If this shift occurs, demand will cause mortgage loan officers to adapt and prioritize it as part of their business.”

Talking to consumers about reverse mortgage benefits has been a recent priority for industry educators. In a recent National Reverse Mortgage Lenders Association (NRMLA) webinar, industry educator Craig Barnes described how it may be beneficial to position the home equity conversion mortgage (HECM) as a “premium” product by focusing on its unique features.

“We pay more for an airline seat that’s in first class and that has more legroom, or a car with more features, or a better cell phone plan,” Barnes said. “Those are features that we’re willing to pay more for. Why not pay more for a mortgage that doesn’t require monthly principal and interest payments, and is non-recourse?”

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