The hurdles to increased acceptance are complex
Today there is an estimated $4.4 trillion in home equity for those 65 and older, many who are woefully unprepared for retirement. As HECM endorsements continue to underperform years past, many ask why more eligible homeowners do not get a reverse mortgage.
A recent report from the Urban Institute reveals some of the underlying causes of homeowners reluctance to get a reverse mortgage despite the potential benefits. For years our industry has generally accepted the statistic that a mere 2% of eligible homeowners. However, last summer a MIT study provided a more detailed summary. Analyzing over 3,700 retired households with a loan to value ratios less and 40%, they found 55% would be eligible for a HECM. The bottom line, 12-14% of all retired households in the U.S. are eligible for the reverse mortgage.
The DC think tank, the Urban Institute, published a report entitled ‘Seniors’ Access to Home Equity’, which determined that adults 65 and older control $4.4 trillion of the total $11 trillion held by American homeowners. With nearly half of households in this group having zero retirement savings why are more not seizing the opportunity to fund their retirement years using a reverse mortgage? The primary factors, the report shows, are