An upstart player in reverse mortgages has a novel idea for broadening its business – give people credit card-style convenience in tapping their home equity.
Bloom Financial has been around since 2021 and is coming up on 1,000 clients with an average age of 71, chief executive and founder Ben McCabe said in a recent interview. An ideal timeline is getting your mortgage paid off by your mid-50s and then rerouting your monthly or biweekly payments into retirement saving. Between expensive homes, high mortgage rates and everyday inflation, it’s getting harder to pull this off.
Mr. McCabe said using a reverse mortgage to pay off a traditional mortgage is like “repatriating cash back into your pocket.” Reverse mortgages are a valid tool for converting equity into cash while remaining in your home – the benefits are non-taxable and won’t trigger clawbacks of Old Age Security payments or the Guaranteed Income Supplement. But reverse mortgages work best in short-term situations where the interest cost is contained.
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