Welcome to “Ask the Pros” – where your questions meet the wisdom of those who understand the ins and outs of reverse mortgages! If you have questions about unlocking the power of your home equity, navigating the ins and outs of reverse mortgages, or making informed decisions about your financial future, you’re in the right place.
In this exclusive series, we tap into insights and expertise directly from our wonderful team members at Longbridge Financial who are helping to shape the reverse mortgage industry each day. Our team of seasoned professionals are committed to fielding common questions, unraveling complexities, and providing invaluable insights to empower you on your financial journey.
Whether you’re a homeowner considering a reverse mortgage, a financial advisor seeking new perspectives, or are simply curious about the unique retirement tool, “Ask the Pros” is your go-to source for reliable insider information. Join us as we explore the nuances of reverse mortgages, debunk myths, and uncover strategies for leveraging home equity in retirement.
Our next featured “pro” gives us an inside look at how you can use a reverse mortgage to purchase a new home! Meet Rob Cooper, Purchase Leader at Longbridge Financial. Rob is passionate about “reverse for purchase” education. We sat down with Rob to learn about his background in the industry and get his insights on how this loan program works and its unique borrower benefits. Let’s dive into the Q&A!
Q: What can you tell us about your experience and how you came to the reverse mortgage space?
A: I began my career in finance, which ultimately laid a foundation for my journey into sales and sales management. For much of my early career, I worked as an account manager focused on customized computer-based educational training, just as personal computers were becoming mainstream. My focus was on the automotive and pharmaceutical industries, and I eventually became the North American Sales Manager, which required extensive travel.
When my first son was born, I wanted to prioritize family and reduce time away from home. That decision led me to the traditional mortgage business, where I spent about six years before a serendipitous introduction to reverse mortgages changed my path. In 2008, I transitioned to reverse mortgages full-time, starting as a loan officer before moving into management roles.
Now, with over 16 years of exclusive experience in the reverse mortgage space, I’ve dedicated the past decade of my career to developing and promoting reverse for purchase financing. This role has allowed me to educate professionals and consumers alike about the exceptional benefits of using a reverse mortgage to purchase a new home—an opportunity I’m still highly passionate about today.
Q: How can a reverse mortgage be used to purchase a new home?
A: Many people—whether consumers, real estate agents, builders, or even financial advisors—aren’t aware that a reverse mortgage can be used to buy a new home. Raising visibility for this innovative financing option has been no small feat. There are many myths and misunderstandings about reverse mortgages in general, so tackling a more niche use case has understandably been an uphill yet incredibly rewarding battle.
Here’s how a reverse for purchase works: buyers bring a down payment to the table, which typically ranges from 45% to 65% of the home’s purchase price.1 The exact amount depends on factors like age, sales price, and the interest rate or margin chosen. The reverse mortgage lender then provides a loan to cover the remaining cost. What’s particularly neat is that it lets buyers achieve two goals in one step: buying a new home and securing a reverse mortgage at the same time. Many buyers prefer this option because it can save money by combining closing costs into a single loan. Plus, it simplifies the homebuying process, making it faster and more convenient.
Another standout feature of this financing option is flexibility—the same flexibility that comes with all reverse mortgage loans: optional monthly mortgage payments. It’s not too good to be true! So long as borrowers continue meeting their loan obligations, like staying current with property taxes, homeowners insurance, and home maintenance, most borrowers choose not to make principal and interest payments, allowing them to redirect those funds toward other expenses as they see fit.
This program is gaining traction, especially given today’s economic challenges, like rising grocery prices, high interest rates, and increasing healthcare costs, all on top of the expense of new home ownership. The reverse for purchase option gives buyers the financial breathing room they need to make confident decisions about their future.
Q: What are the borrower benefits of reverse for purchase compared to traditional financing options?
A: At Longbridge, we like to say a reverse for purchase is a “dream loan for your dream home,” offering increased flexibility and financial control compared to traditional financing options. Reverse for purchase borrowers are often able to afford “more home” or a home in a more desirable location than they otherwise would have with a traditional home loan.
In fact, we recently conducted an anonymous survey of our reverse for purchase borrowers2 and 68% reported being able to buy a higher-value home or a home in a more desirable location. On top of that, 93% said they would choose this financing option again, and 91% would recommend the loan to a loved one. Pretty incredible feedback!
So why do our borrowers love this option so much? A big driving factor is that, because you only need to bring 45% to 65% of the home’s purchase price as a down payment,1 they’re able to free up 35% to 55% of their cash to remain in retirement or savings accounts. This preserves liquidity, which is critical for those entering or already living on a fixed income.
And as I mentioned, unlike a traditional mortgage, reverse mortgage borrowers have the choice to skip monthly principal and interest payments.3 Instead, these payments are added to the loan balance and deferred until the loan becomes due—typically when the borrower sells the home, moves out, or passes away. This flexibility dramatically improves monthly cash flow, helping borrowers maintain financial security and adapt to the challenges of retirement.
The bottom line for borrowers: the reverse for purchase option minimizes monthly expenses3 while allowing buyers to maximize their cash reserves. It’s a solution that empowers borrowers to enjoy their new homes while safeguarding their long-term financial well-being. And whether you’re looking to “rightsize” your space, move closer to family, or finally live in that dream neighborhood, the reverse for purchase can open doors for your retirement—literally and figuratively.
Thank you, Rob, for sharing your experience and expertise with us!
If you’re interested in learning more about reverse mortgages or want to find out if you qualify, contact our team today. Our reverse mortgage consultants will get to know you and your financial situation to help you determine whether a reverse mortgage is the right fit for you. Empower your financial journey – reach out to Longbridge Financial now to make informed decisions about unlocking the power of your home.
