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.
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."
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.
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