It is important for financial advisers to be properly updated with the recent changes in reverse mortgage so that they can discuss the program with their clients. According to the latest reverse mortgage information, recent changes will result into fewer seniors qualifying for the program. However, industry professionals claim that while adjustments are tough, the new rules will provide consumers with better deals.
One of the advantages is the reverse mortgage will be less expensive than it used to be. Because there is competition among lenders, consumers are often offered better interest deals. HECM will continue to be pursued because of the reduction in the annual mortgage insurance premiums notwithstanding the fact that origination fees will possibly return with loss of closing cost credits.
Based on the explanation of Michael McCully of New View Advisors, overall cost reduction will outweigh initial upfront fees. Borrowers do not like paying upfront closing fees. Lower margins and/or lower fixed rates will mean a lower overall cost which can result into bigger savings over the term of the loan than incremental upfront closing costs. If HECM offers a lower interest rate than home equity loan line of credit, consumers will opt for HECM is spite of the upfront fees.
Because of the reduction in possible profits, firms using expensive marketing strategies will return to old tactics that are relationship-based and less invasive. This will be a win-win situation because consumers are actually turned off by aggressive marketing techniques that have also destroyed the product’s reputation.
Many believe that changes can encourage the growth of a stronger proprietary market where consumers will have more choices. This will also open many opportunities for product development that will be beneficial to the reverse mortgage market and consumers. The fact is the changes that were made will make reverse mortgage as a viable option for retirement planning.
Aside from researching online for reverse mortgage information, financial advisers as well as senior homeowners can also attend free webinars and symposiums that provide reverse mortgage education. Different scenarios will be explained so that reverse mortgage can be used a supplemental income and support for retirement.