Retirement expert Jamie Hopkins discussed new research conducted by WSFS Mortgage that sheds light on the benefits of reverse mortgages but also significant misconceptions and limited awareness.
Why it matters: Only 7% of survey respondents considered themselves very knowledgeable about reverse mortgages, while 31% admitted to having no knowledge. “More education is clearly needed,” says Hopkins.
What they’re saying: With increased knowledge, respondents gained a better understanding of how home equity and reverse mortgages could support a retirement income plan.
- Homeowners with knowledge of reverse mortgages agreed the right use of the product can provide needed cash flow (76%) and more financial freedom (62%) in retirement, help cover expenses like long-term care (61%), and allow them to stay in their home longer (79%).
- Additionally, among those who would consider taking out a reverse mortgage, the top reasons were “covering home improvements (32%), supplementing regular income (32%), and help covering daily living expenses (30%).
“While reverse mortgages or other strategic uses of home equity can improve a retirement cash flow picture, they must be used in coordination with an overall financial plan,” says Hopkins.