When it comes to reverse mortgages, loan age isn’t as important as borrower age as far as being a strong driver of prepayment rates. As borrowers get older, the odds of the loan prepaying continues to increase.
According New View Advisors, data shows that for seasoned HECM loans, 64 year-old borrowers have prepaid at a rate of 4.3% per year, 74 year-olds at a rate of 6.7% per year, and 84 year-olds at 10.1%. If we look at the borrower age (or age of the youngest borrower, in the case of multiple borrowers), a strong correlation emerges.
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