The reverse mortgage market has been in a state of flux ever since the U.S. government in 2017 reduced the amount borrowers age 62 and older can draw from their home equity for its Home Equity Conversion Mortgage (HECM) and raised that loan’s premiums. Now, a handful of reverse mortgage lenders are rolling out proprietary products with fewer restrictions, lower upfront costs and the ability to draw down more money
Increasingly, financial advisers are recommending reverse mortgages for some retirees.
“If using the equity in your house will enable you to travel or live where you want to live and not spend the whole retirement stressing about running out of money, it’s really a wise use of the equity,” said Jeremy Kisner, senior wealth adviser at Jeremy Kisner Wealth Management in Phoenix.
A reverse mortgage can help you pay down your existing mortgage and free up cash each month. Or you could use the money to consolidate debt, make home improvements or pay for necessary expenses such as long-term care.
The government’s rule tightening for HECMs has opened a window for the new proprietary reverse mortgages.
“I would really compare any reverse mortgage to a traditional mortgage. I think this is a good practice for anyone age 62 or over who is looking to purchase a home or refinance,” said Jamie Hopkins, director of retirement research at Carson Group, a retirement advisory group, in Bryn Mawr,