Research Shows High Levels of Consumer Satisfaction With Reverse Mortgages December 13, 2010
NRMLA, the National Reverse Mortgage Lenders Association, last week published independent research showing high levels of satisfaction among seniors with reverse mortgages and equally positive numbers indicating borrowers understood the transaction they were getting into and felt no pressure getting a loan.
NRMLA President Peter Bell, along with pollster David Marttila, of Marttila Strategies, and David Tamasi, of Rasky Baerlein Strategic Communications, hosted a dinner for national media Wednesday evening to discuss the results. Representatives from The Washington Times, National Journal, U.S. News & World Report, Boston Globe, Bloomberg and The Hill attended the event.
Bell conducted additional interviews with The Wall Street Journal, Money Magazine and Dow Jones.
The study, “The Retirement Abyss: America's Seniors' Search for Security,” shows that almost 85 percent of senior citizens and their adult children are deeply pessimistic about the state of the economy and nearly 50 percent of senior citizens worry they will not have enough money to support themselves in retirement. One-in-four seniors believe they will not be able to cover their monthly expenses, such as housing and utilities, and nearly 20 percent believe that, without additional cash flow, they will have to give up their homes.
The poll, conducted by Marttila Strategies on behalf of NRMLA, surveyed 1,800 seniors and their adult children, nationwide, between October 16th and 30th. The survey has a margin of error of +/- 4 percent.
Approximately 74 percent of those reverse mortgage borrowers surveyed described their experience as positive choosing a rating of 7, 8, 9, or 10 out of 10 point scale with 10 signifying complete satisfaction. The survey revealed that seniors with reverse mortgages fully grasped the financial terms associated with the product, with 75 percent saying they understood the financial terms well or very well. Finally, 90 percent of all seniors who selected a reverse mortgage as a retirement security solution felt no sales pressure, and the same proportion indicated they were more than adequately informed about this financial product.
Suze Orman Says Yes to Reverse Mortgages
Posted on June 10, 2011
Suze Orman on her CNBC show recently responded to a viewer question by stating that a reverse mortgage is a better option than selling stocks.
During the segment, a caller stated that his 85 year old father had been liquidating stocks over the past few years to pay for larger ticket items, including the upkeep of his home. His question was, “is it better for him right now to continually unload his portfolio and incur capital gains on the stocks he sells or risk borrowing, in a sense, against his kids future during these crazy times?” The father would like his two kids to inherit the home and his investments after he passes.
Suze says that a reverse mortgage would be the better option. Her reasoning is as follows:The heirs will have a better chance of recouping the lost value of stocks over the years since the stock market recovers faster than the real estate market. Reverse mortgage interest rates are low and the mortgage relief bill that came into effect in October makes reverse mortgages far more beneficial than ever to take out today than ever before because of fees being limited.
This segment highlights how a reverse mortgage can help extend the value and life of other assets when they are provided additional time to gain value before being drawn down.
When looking at retirement plans, older homeowner’s need to take a holistic approach. There is no one size fits all solution. A reverse mortgage will not be the right solution for everyone, however it should not be overlooked as part as the overall retirement plan. When consulting a retirement planner be sure to bring up the option of a reverse mortgage. After all, the home is more than likely the largest source of untapped capital for most senior home owners.
How to Pay Off Your Mortgage
There are many ways to pay off your existing mortgage.
Keep making payments until you’re old and broke. Or worse yet, keep making payments when you are old and broke. Sounds like a gas, right? It’s not. It’s tough business. As we get older and the fixed income kicks in, it gets tough to continue to make the payments on the home. But it’s either make the payments, move out, or get creative. This brings up another point – who are we paying off the house for? The estate? Sure, the kids, grandkids, etc. would love a little something, but do they really want to see your quality of life decline so that they can get – and maybe pay tax on – your house. No.
Downsize
It might be right for some, but if you’re anything like me, you like your house. You want to stay there. Let’s move on.
Keep cashing out
Make some payments. Refinance or take a home equity loan. Make some more payments. Refi again, or take another loan. Make some more payments … You get the picture. It is a nasty cycle that is perpetuated by the lenders. What’s more – it is expensive.
Reverse Mortgage
Now we’re talking. If you are over 62, have sufficient equity in your home, and are smart enough to get out of the cycle of payments, refis, and other options, you can get a reverse mortgage. Even if all you do is pay off the mortgage, it can be the way to go. But you can often pay off the mortgage, and put some money in your pocket. The bank doesn’t take the home when you move out or die, the loan comes due. Just as the loan would continue to come due in any other scenario. It is most certainly at least worth looking into.