Results of the first nationally representative survey of reverse mortgage shoppers—older homeowners who have gone through reverse mortgage counseling and either taken out a loan or decided not to do so—are presented in this AARP Public Policy Institute (PPI) Research Report by Donald L. Redfoot of PPI, Ken Scholen of the AARP Foundation, and S. Kathi Brown of AARP Knowledge Management. This survey provides the first detailed look at consumer interest in reverse mortgages, consumer experiences with lenders and counselors, why some consumers decide against these loans, how borrowers use the loan proceeds, and how well reverse mortgages address borrower needs.
The report reaches five main conclusions:
- FHA's Home Equity Conversion Mortgage Program has successfully created the foundation for the financial infrastructure of the reverse mortgage industry.
- Reverse mortgages have enabled older homeowners to address a range of needs and desires with a high level of initial satisfaction.
- Ninety-three percent of borrowers in the survey report that their reverse mortgages have had a mostly positive effect on their lives.
- Loan costs are too high.
- High costs are cited three times more often than the next important reason as the main reason for deciding against a reverse mortgage, and two-thirds of borrowers also say that the costs are high.
- Consumer knowledge about and confidence in reverse mortgages is low.
- Misunderstandings about reverse mortgages are still common, and most consumers in national surveys state that they do not know much about these loans.
- More research is needed on how consumer uses of reverse mortgages change over time as well as on the long-term impact of these loans on financial well-being.