Positive Reverse Mortgage Experiences
It is hard to find a more satisfied contingent as those polled regarding their experiences with reverse mortgages. While the financial product received bad press for early versions that included an equity share with the lender, more recent surveys revealed that today's seniors are extremely happy with their reverse loans.
"Rarely does a research program provide such decisive results as this one has," said John Marttila, of Boston-based Marttila Strategies, a public opinion research firm. "These attitudes belie the negative accounts that have been widely reported in the media."
Some of the recent negativity surrounding reverses has come from adult children who have seen their folks swayed into buying questionable annuities with their reverse mortgage funds. While reverse mortgages had a reputation for sky-high costs, rates and fees have come down. Fixed-rate programs are now in place, and counseling is mandatory before any loan can be processed.
Marttila Strategies issued three national surveys and conducted six focus groups to determine how three different cohorts felt about reverse mortgages.
The groups included adult children with at least one surviving parent who indicated that their parents' mortgage balance was less than half what the house was worth; seniors who owe less than 50 percent of their home's equity but do not hold reverse mortgages; and owners who have had reverse mortgage for at least two years.
Presented with a 10-point scale, with 10 representing the maximum level of satisfaction, 43 percent of the respondents gave their mortgages the highest rating possible, a 10. Thirty-two percent graded their loans at between six and nine.
In addition, more than half would "definitely" recommend a reverse mortgage to another family member or friend, and 28 percent more would "probably" do so. Only 15 percent said they definitely would not recommend the loan.
The data also revealed four salient facts:
- Seniors (and their adult children) are deeply worried about the current economic situation, and the consistent sentiment is that the nation is facing "tougher times" ahead.
- An overwhelming majority of seniors think that their best financial strategy is for them to pay their bills and not worry about leaving an inheritance. Their adult children agreed.
- Seniors want to stay in their homes for the rest of their lives.
- More than 40 percent of the respondents worry that they will not have enough money in the future to lead the kind of life they would want.
An example of the last point was recently shown in Idaho. AARP reported that there was a 93 percent increase in just nine years in the number of those 50 years old and older taking out, or planning to take out, a reverse mortgage. Nearly 7 percent of this group lives in poverty, the third-highest rate in the Western region.
According to the U.S. Census, Idaho is the 39th most populated state but it is seventh for the percentage of people 50 and older who have taken out, or are planning to take out, a reverse mortgage.
This research demonstrates that a majority of seniors are pleased with their reverse mortgages. Do you think the same is true of people with conventional mortgages?
(photo by Rain Moth Gallery)