Reverse Mortgages Can Provide Needed Cash Flow and Flexibility, But Educational Opportunities Still Exist, WSFS Mortgage Study Reveals

According to a new study from WSFS Mortgage, a division of WSFS Bank (Nasdaq: WSFS), most homeowners with knowledge of reverse mortgages agree they can allow you to stay in your home longer (79%) and provide needed cash flow (76%) in retirement. Sixty-two percent of respondents with knowledge of reverse mortgages agreed they can provide more financial freedom in retirement, while 61% said they can help cover expenses like long-term care.

“Reverse mortgages have undergone significant changes the past decade, but the biggest change is how many financial advisors are now incorporating housing wealth into their retirement income planning,” said Jeffrey M. Ruben, President of WSFS Mortgage. “A reverse mortgage could be a good option for those seeking to strengthen their cash flow in retirement.”

The nationwide study, which surveyed 750 homeowners aged 60 years or older, gauged respondents’ financial stability, knowledge and attitudes toward reverse mortgages.

Educational Opportunities

Lack of knowledge around reverse mortgages may be driving homeowners to overlook them as a viable option for their financial situation. Among respondents, nearly one-third (31%) report not being knowledgeable at all about reverse mortgages, 40% are slightly knowledgeable and 22% moderately knowledgeable, while just 7% report being very knowledgeable.

In comparison to reverse mortgages, the majority of respondents felt they had a better understanding of credit cards (65%), a traditional mortgage (61%), personal loans (60%), and a line of credit (51%), underscoring the educational opportunity that exists.

“It is not surprising that most Americans do not have a great understanding of a reverse mortgage as it is mostly a strategy that is not available for younger Americans,” said Jamie P. Hopkins, Senior Vice President, Director of Private Wealth Management, Bryn Mawr Trust. “So, while we get hands-on experience with other borrowing techniques like student loans, credit cards, and traditional mortgages as we move through life, we don’t get the same hands-on experience with reverse mortgages. As such, the need for more education around the product and strategies are arguably more important for Americans.”