A sizable, independent, nonprofit organization called the American Association of Retired Persons (AARP) is committed to assisting people over 50 in achieving independence, including financial independence.
Although the organization, which serves 37 million senior citizens and counting, doesn’t directly offer reverse mortgage products, it does have some very significant opinions about them.
For retirees who may be considering a reverse mortgage as a way to age in place, this is where AARP comes into play.
What does AARP think of reverse mortgages?
Reverse mortgage products have received the support of AARP as a tool to assist older Americans access their home equity during retirement.
Even though the company doesn’t actually provide reverse mortgages, it does provide some helpful information on this type of loan if you’re looking for more details from an impartial third-party.
On its website, AARP has a section devoted to reverse mortgages, which can be found here.
AARP provides a glossary of reverse mortgage terms as well as a wealth of information and questions to ask yourself if you are considering a reverse mortgage, in case you are unsure of what the term “non-recourse” means or are getting ready for your reverse mortgage counseling session.
AARP influences reverse mortgage policy
Through its Public Policy Institute, AARP plays a role in policymaking in addition to serving as a third party resource for information about reverse mortgages.
AARP representatives frequently attend congressional hearings to consult with decision-makers on the availability and protections of reverse mortgages.
Reverse mortgage reports and studies have also been released by AARP’s public policy division to help decision-makers with the federally insured Home Equity Conversion Mortgage program. T.
The vast majority of reverse mortgages are currently made through this loan program, which insures them under the Federal Housing Administration. It is responsive to changes in housing policy made in Washington, D.C. C.
Click here for a recent AARP Public Policy report on reverse mortgages.
AARP works to protect reverse mortgage borrowers
As the world’s largest senior advocacy organization, AARP works to make sure that the financial products available to seniors are secure and serve their needs.
Those products include reverse mortgages. AARP has defended reverse mortgage borrowers in the few instances where they have not been happy with their borrowing experience.
The most recent manifestation of this has been the defense of non-borrowing spouses in reverse mortgage transactions.
According to FHA policy, non-borrowing spouses who are not listed on the property title at the time of the loan closing are not eligible to inherit the home after the borrowing spouse passes away or vacates the property.
Another recent instance was when AARP asked the Federal Housing Administration to define the term “non-recourse” in the context of reverse mortgages.
The FHA clarified that in the event that a borrowing spouse dies or vacates the property, any non-borrowing spouse may purchase the property for fair market value.
Due to this crucial safeguard, a reverse mortgage heir will never be required to pay back more on the loan than the house is worth at the time of the sale.
Does AARP recommend reverse mortgages?
AARP makes neither recommendations in favor of nor against reverse mortgages. However, they do urge borrowers to invest in their education so that they can make the best decisions for their particular situation.
What is the downside to a reverse mortgage?
The loss of home equity is one of reverse mortgages’ major drawbacks. You’ll make less money when you sell the property or have less borrowing power if you need a new loan because you’re not reducing the balance of your reverse mortgage. You’ll pay high upfront fees.
What does Suze Orman say about reverse mortgages?
There is no one size fits all solution. Although a reverse mortgage won’t be everyone’s best option, it shouldn’t be disregarded as a component of their overall retirement strategy.
Why are people disappointed with reverse mortgages?
The disadvantages of a reverse mortgage include possible higher closing costs than those of a traditional loan, the requirement that the property be your primary residence, the loan’s inability to be assumed, and possibly less equity available to leave your heir as an inheritance.