The 2007 AARP Survey on Reverse Mortgage
More and more senior homeowners are taking advantages of the conveniences of the reverse mortgage industry. The popularity and widespread exposure of reverse mortgage loans is garnering the attention of many groups geared toward seniors. One such organization is the AARP, or American Association of Retired Persons, which is a non-government organization and special interest group.
In 2007 Ken Scholen, who has published much information on reverse mortgages, conducted the AARP Public Policy Institute Research Report. The report represents the first survey of its kind, studying reverse mortgages for seniors from the perspective of borrowers and homeowners who had considered these loans, but ultimately decided against them.
This article presents some of the figures and statistics from the report results, as well some more general reverse mortgage facts provided in the report.
Statistics& Findings
• As of 2007, 345,762 loans had been insured in the history of the reverse mortgage program.
• Nearly one-third (107,367) of all loans so far were made in FY 2007.
• Only 1 percent of older households currently have a reverse loan.
• Consumer awareness of reverse mortgage programs has increased, but interest in the loans has decreased.
• The number individuals ages 45 and older who had heard of the loans increased from 51% in 1999 to 70% in 2007.
• The share of respondents who said they were willing to consider a reverse mortgage in the future declined from 19% in 1999 to 14% in 2007.
• More respondents identified “necessities” rather than “extras” as a reason for considering a reverse loan, by a margin of 48% to 38%.
• When asked to name the number one reason for considering a reverse loan, borrowers responded with “paying off existing mortgage.”
• Twenty-six percent (26%) of those surveyed said that they considered using a reverse loan to help pay for health care or disability needs, most frequently being prescription drug costs.
• Twenty-eight percent (28%) of respondents identified credit card debt as a reason for considering a reverse loan.
While these statistics provide interesting insight into reasons many older Americans pursue a reverse mortgage, remember that every homeowner’s needs are unique. The funds from the bank reverse mortgage can be used in anyway the homeowner deems fit. The entire loan disbursement can be moved into investments, or the borrower can spend the money any way they wish.