Seniors and Reverse Mortgages
Know the Facts
In The Week Magazine article 5 Important Things To Know About Reverse Mortgages, Eileen Bailey explains the ins and outs of reverse mortgages, and what seniors should know 'before signing on the dotted line.' A decade ago, many opportunistic lenders persuaded senior citizens to borrow money against the market value of their home.
Approximately 100,000 loans wound up in default. Lenders often swiftly seized houses if the borrowers missed a paperwork deadline or fell behind on taxes or insurance. In some cases, homeowners were asked to take their name off their deed, and then lost their home after their spouse died.
Residents of majority-black areas were six times as likely to have a reverse mortgage end in foreclosure than borrowers in mainly white neighborhoods. They were victimized by unscrupulous lenders.
The National Council on Aging published Reverse Mortgage Facts for Seniors. Interesting points of the article include anyone considering a reverse mortgage must get counseling, some borrowers may still face foreclosure, most borrowers use the funds to pay for basic needs in retirement, and reverse mortgages should not be used as a last resort. Examining long-term responsibilites over short-term benefits of these loans is crucial.
If you are considering a reverse mortgage, beware of the downfalls, TV pitchmen, and print advertisements. Consult with a financial advisor as well as a reputable mortgage broker before you decide which mortgage is best for you.