Reverse Mortgages: What Homeowners (Don't) Know and How it Matters

42 Pages Posted: 27 Aug 2015

See all articles by Thomas Davidoff

Thomas Davidoff

University of British Columbia (UBC) - Sauder School of Business

Patrick Gerhard

Maastricht University

Thomas Post

Maastricht University - School of Business and Economics - Department of Finance; Netspar

Date Written: June 18, 2015

Abstract

Reverse mortgages help elderly homeowners to unlock and consume home equity while continuing residing in their homes. Demand for reverse mortgage is far behind predictions. Based on a survey of U.S. homeowners aged 58 we assess product knowledge (literacy) and its relation to reverse mortgage demand. Awareness of the product is very high while knowledge is fairly low. Lack of product knowledge relates to low interest in the product. Knowing peers who have a reverse mortgage increases interest. Respondents that would benefit most from reverse mortgages (lower income, insufficient savings) are more likely to accept a reverse mortgage. However, those respondents do not have good knowledge about the product.

Keywords: Reverse mortgage demand, reverse mortgage knowledge, reverse mortgage literacy

JEL Classification: D14, D81, G11, G21

Suggested Citation

Davidoff, Thomas and Gerhard, Patrick and Post, Thomas, Reverse Mortgages: What Homeowners (Don't) Know and How it Matters (June 18, 2015). Netspar Discussion Paper No. 06/2015-024. Available at SSRN: https://ssrn.com/abstract=2651032 or http://dx.doi.org/10.2139/ssrn.2651032

Thomas Davidoff

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

Patrick Gerhard

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

Thomas Post (Contact Author)

Maastricht University - School of Business and Economics - Department of Finance ( email )

Tongersestraat 53
Maastricht, 6200 MD
Netherlands
+31 43 38 83899 (Phone)
+31 43 38 84875 (Fax)

HOME PAGE: http://www.thomas-post.com

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.netspar.nl

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