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Seniors who have to make a mortgage payment each month are three times more likely to fund a reverse mortgage loan than seniors who don’t have an existing mortgage. The chart below shows senior homeowners age 62 and older who meet one of two sets of criteria: They have either paid off their homes in full or they have a mortgage balance between 10 and 55 percent LTV. As you can see, the numbers are close: 3.5 million seniors own their homes free and clear, and 2.9 million seniors are still paying a mortgage under 55 percent LTV.
Many seniors work most of their lives with the goal of paying off the mortgage on their homes, and once they do, the chances of them taking out a reverse mortgage loan decline greatly. Of course, we have all done reverse mortgage loans for seniors who don’t have a mortgage, but they are few and far between. It does not make sense to spend your time and money marketing to this group because response and conversion rates are low.
In my experience, when it comes to direct mail marketing, response and conversion is three times better when you focus your efforts on seniors with an existing mortgage loan. With this in mind, next time you launch a direct mail campaign, don’t target those with an LTV of 0 to 55 percent. Work with a direct mail specialist to target potential consumers with an LTV of 10 to 55 percent. This will cut your no-response rate in half.
