Five alternatives to reverse mortgages



Despite this record high capital growth for senior citizens’ homes, the popularity of reverse mortgages for older Americans remains low. A total of 42,000 home equity conversion mortgages (HECMs) were sold in 2020, according to the US Department of Housing and Urban Development (HUD), obtained by the Center for Retirement Research (CRR), nearly half of 2010. Boston College.

Citing a 2017 report from the Consumer Financial Protection Bureau (CFPB), CRR noted that one possible reason for the decline is that reverse mortgages are not in line with plans that many seniors may have for their property.

“Reverse mortgages reduce the homeowners’ equity stake in their home,” the report said. “Homeowners who want to sell their homes after receiving a reverse mortgage are particularly at risk because the loan balance is likely to grow faster than the value of their home is valued. This could limit the ability to relocate or cope with a financial shock. “

What should homeowners consider before taking out a reverse mortgage?

Reverse mortgages are for retirement age homeowners who have either paid off their mortgage or have built a lot of equity in their homes. This type of mortgage is for homeowners who want to use their home equity to get a fixed monthly payment, a line of credit, or a combination of both, without losing title to their property.

Reverse mortgages are often tax-free and payments are deferred until the homeowner leaves, sells the house, can pay property taxes or insurance, or dies. After that, the property is sold, and the entire excess amount goes to the owner or his heirs.


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