Reverse mortgage payments have fallen, but borrowers may still find value: AARP

Reverse mortgage industry experts have been talking for months about the impact of high interest rates on their ability to do business, but now… AARP We investigated the impact in detail.

Rising interest rates are bad news for the mortgage industry in a broad sense, but the impact on reverse lending is more subtle, Bruce Simmons said. american liberty mortgage He described it to AARP in the Denver area.

“If a reverse mortgage can resolve your situation, it still makes sense for many people,” Simmons told the group. “There are so many people who could benefit from this even at current interest rates.”

These sentiments echo what Simmons shared with RMD earlier this year when asked about the progress of the business after the overall disruption observed in 2023. Inconsistent interest rate forecasts have made his business difficult, but different types of marketing are taking place, including a refocus. Simmons told RMD in February that he implemented existing marketing practices that helped him improve his situation.

But rising interest rates also affect the amount owed on negatively amortized loans, said Stephanie Moulton, a longtime academic researcher on reverse mortgages. ohio state university.

“Balance growth will accelerate and your heirs may have less equity when they sell the home because the balance growth will accelerate,” she told AARP.

However, the utility of eliminating forward mortgage payments, along with numerous payment options such as standby lines of credit and monthly recurring payments, still has the potential to add value for reverse mortgage borrowers, Simmons said. he added.

Bruce McCrary, Senior Vice President National Credit Counseling Foundation (NFCC) also notes that while reverse mortgages can add value to borrowers in certain situations, the fee structure for home equity lines of credit (HELOCs) may potentially make more sense for some seniors. I shared that I have sex. However, in certain situations, a reverse mortgage may be a better idea for some individual borrowers.

“[It] It depends on the individual’s ability to borrow, the reason for borrowing, and what the money will be used for,” McCrary told AARP. “The answer depends on people’s financial situation and goals.”