The question is... what do the holders of reverse mortgages have to say about reverse mortgages? I asked ChatGPT today just how a potential reverse borrower could get unbiased information from actual reverse mortgage borrowers. Here’s what came up:
Seek Out Customer Reviews and Testimonials
- Many reverse mortgage companies, such as American Advisors Group (AAG)/ Now FAR (Finance of America Reverse) and Longbridge Financial, feature testimonials from clients on their websites.
- Independent review platforms like Trustpilot, the Better Business Bureau (BBB), and Consumer Affairs provide a mix of positive and critical feedback from actual users.
Join Online Forums and Social Media Groups
- Platforms like Reddit, AARP’s online forums, and Facebook have groups where reverse mortgage holders discuss their experiences.
- These forums offer real-life insights, allowing prospective borrowers to read unfiltered opinions and ask questions directly.
Attend A Reverse Mortgage Counseling Session
- Reverse mortgage counseling is required before obtaining a loan, and counselors can share general feedback from previous clients, providing an overview of typical borrower satisfaction.
Speak with Reverse Mortgage Lenders
- Many lenders can connect prospective borrowers with satisfied clients who are willing to discuss their experience. While lender-provided references may lean positive, they can still offer valuable insights.
Consult Consumer Financial Protection Bureau (CFPB) Complaints Database
- The CFPB maintains a database of mortgage complaints, including those related to reverse mortgages. Reviewing complaints and resolutions can give prospective borrowers a sense of common issues and lender responses.
Reverse mortgages are essentially interest-only loans that do not require principal and interest payments (tax, insurance HOA, etc. are still required). Money, like many other things, is not free. Here’s how the bank benefits… The interest rate is a little higher… but the primary benefit to the bank is that the loan amount compared to the value of the home (the LTV), is very low. Lenders lend out money at 96.5% of the appraised value (LTV) daily… these loans are approved at closer to 50% LTV. That gives lenders a 50% cushion and is huge in terms of reducing the lenders' risk.
The borrower retains title to the home and can still set up the property to be inherited by his or her heirs (one of the biggest misconceptions about reverse is that the bank keeps the home). Note that the equity in the home can ultimately be less than the amount owed; interest accrues over time, but it’s equally possible that the home will have increased in value. The HUD insurance integral to the loan ensures that, regardless of the home's remaining equity at a maturity event, the borrower (or the borrower's Heirs) will never be responsible for more than the appraised value of the home. This provision is called non-recourse... it is the essence of reverse mortgages and is a huge benefit to the borrower and the borrower's heirs.
Sometimes those complaining about reverse mortgages forget that no monthly mortgage payment was ever required. Quality of life is hard to quantify but the customer satisfaction around reverse mortgages is not *. This study (below) and others speak volumes. Why are people negative about reverse mortgages?... I believe the biggest reason is that they’ve never looked into them.
*https://academic.oup.com/psychsocgerontology/article/75/4/869/5076324
They fixed em'
