The Relationship between Reverse Mortgage Borrowing, Domain and Life Satisfaction

Journals of Gerontology Series B: Psychological Sciences and Social Sciences, doi: 10.1093/geronb/gby096

29 Pages Posted: 18 Oct 2018

See all articles by Cäzilia Loibl

Cäzilia Loibl

The Ohio State University - Department of Human Sciences

Donald R. Haurin

Ohio State University (OSU) - Economics

Julia Brown

University of Maryland - Department of Economics

Stephanie Moulton

Ohio State University- John Glenn College of Public Affairs

Date Written: August 20, 2018

Abstract

Objectives: Reverse mortgages allow adults aged 62 and older to borrow against the equity in their homes without incurring monthly loan repayments.

This study examines the relationship of reverse mortgage borrowing with older adults’ satisfaction with their financial situation, housing, health, and daily life/leisure as well as with life as a whole.

Method: A new national data set of 1,088 older adults, comprised of loan data, credit histories, and responses to a phone survey, was created. Our estimation strategy compares reverse mortgage borrowers to older adults who obtained mandatory counseling but not a reverse mortgage.

Results: Reverse mortgage borrowers have significantly higher financial and housing satisfaction compared to non-borrowers; no differences were found for health, daily life/leisure, and general satisfaction. These satisfaction domains contribute differently to general satisfaction for reverse mortgage borrowers relative to non-borrowers: housing satisfaction has a greater influence for borrowers and health a greater influence for non-borrowers.

Discussion: Our study provides new knowledge about the longer-term outcomes of reverse mortgage borrowers. The positive association of reverse mortgage borrowing for housing and financial satisfaction and, in turn, general satisfaction, provides insights regarding borrower experiences with this controversial financial tool.

Keywords: General and domain satisfaction, Home equity withdrawal, Mortgage debt, Reverse mortgage, Housing wealth

Suggested Citation

Loibl, Cäzilia and Haurin, Donald R. and Brown, Julia and Moulton, Stephanie, The Relationship between Reverse Mortgage Borrowing, Domain and Life Satisfaction (August 20, 2018). Journals of Gerontology Series B: Psychological Sciences and Social Sciences, doi: 10.1093/geronb/gby096. Available at SSRN: https://ssrn.com/abstract=3247938

Cäzilia Loibl (Contact Author)

The Ohio State University - Department of Human Sciences ( email )

1787 Neil Avenue
265K Campbell Hall
Columbus, OH 43210
United States
614-292-4226 (Phone)

Donald R. Haurin

Ohio State University (OSU) - Economics ( email )

154 N. Oval Mall
1010G Derby Hall
Columbus, OH 43210-1172
United States
614-292-0482 (Phone)
614-292-9530 (Fax)

Julia Brown

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Stephanie Moulton

Ohio State University- John Glenn College of Public Affairs ( email )

110 Page Hall
1810 College Road
Columbus, OH 43210
United States

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