Tuesday, October 16, 2012

Dangers of Reverse Mortgages

Yesterday, The New York Times ran a front-page article on the financial dangers of reverse mortgages. Unsuspecting seniors, lured by deceptive sales pitches or lack of full disclosures, who took out reverse mortgages are losing their homes. Defaults are running high. Reverse mortgages allow homeowners 62 and older to borrow money against the equity they have built up in their homes. They pay back the loan when they die or move.

Some people look at their homes as a bank, and they can use the money from a reverse mortgage for a vacation or to pay for school for grandchildren or for healthcare needs. These are practices fraught with peril for many seniors.

The article, "Abuse Growing in Loan Option for the Elderly," (print title) not only profiles people who have lost their homes, but also gives tips about things to look out for.
  •  The fees may not be affordable.
  • You still have to pay property taxes, insurance and maintenance.
  • Make sure both spouses are on the deed. If your spouse and dies, and he or she is the only name on the deed, then you'll lose the house and have to move.
  • Read the details of the loan. There are no standards.
 You can learn about more about reverse mortgages by reading the article on the NY Times website: 

Regulators are noting new abuses tied to reverse mortgages, which let people 62 and older borrow money against the value of their homes and not pay it back until they move out or die."



1 comment:

Chris from 123homeloans.co.za said...

Although a reverse mortgage has many potential benefits for senior homeowners, it also has its drawbacks. Reverse mortgages can have higher up front fees compared to other types of financing. As the homeowners get to retain the title of the home, they have the added burden of paying for insurance, taxes, maintenance and all other expenses related to the property. It is best to seek advice from a financial professional to see if a reverse mortgage is right for your situation.