Category: Consumer education and empowerment
Issue Brief: The costs and risks of using a reverse mortgage to delay collecting Social Security
This issue brief explores the tradeoffs of borrowing a reverse mortgage loan in order to delay claiming Social Security. The Consumer Financial Protection Bureau (CFPB) examined different scenarios and found that, in general, the reverse mortgage loan costs exceed the additional increase in Social Security that homeowners would receive in their lifetime by delaying Social Security benefits. Furthermore, using this strategy generally diminishes the home equity available to borrowers later in life. As a result of the diminished equity, borrowers that seek to sell their homes after using this strategy may have limited options for moving to a new location or handling a financial shock.