Today, Bernard said she does reverse mortgage deals as part of her work. “I do reverse mortgages now,” she said. “Those products are there for a reason. For senior citizens with fixed or limited income, I’m telling you, it’s a godsend. I have a couple of clients now much older, who were struggling. They’ve got the equity now to take advantage of that program.”
The trillions in untapped equity speak volumes
Despite such stories, the massive amount of equity available to be tapped nationwide suggests an aversion to using the product. According to Finance of America Reverse (FAR) – one of the nation’s top reverse mortgage lenders – seniors from the age of 62 and older have amassed more than $12 trillion in home equity.
FAR recently undertook a study showing that despite increases in financial anxiety, homeowners still aren’t looking to their housing wealth to help assuage their concerns. To wit, the likelihood of using a home equity loan increased only marginally with a slight uptick from 28% in 2022 to 32% in 2023, according to the study.
A key finding points to varying levels of product knowledge and low familiarity with the different ways financial products can be used as potential factors contributing to financial anxieties for some homeowners. Notably, respondents familiar with a reverse mortgage were also more likely to know the different use cases of financial products – with 73% reporting they were aware home equity could help supplement income in retirement, compared to just 40% for those unfamiliar with a reverse.
Baby Boomers display a lack of understanding
Baby Boomers were among the most unfamiliar with modern financial products, according to the report. The segment reported being less familiar with home sharing, cash-out refinancing, reverse mortgages, and cryptocurrency when compared to Gen X and Gen Z/Millennials. Women and older generations were also less familiar with different financial products and less aware of how the benefits of home equity – and reverse mortgages specifically – can help address many of their financial concerns, including the ability to pay for certain expenses, such as healthcare costs and home renovations.