What are the good and the bad of reverse mortgage? What should you look out for?
Answered by:
I agree AARP gives good advice about reverse mortgages. The big print give it and the small print takes the advantages away. Many reverse mortgages have small print provisions that require you to live in the home and pay property taxes, homeowners association fees and other bills. You could wind up not having a place to live because you did not comply with the fine print. Never get a reverse mortgage without first reading the fine print, going over all the terms and consequences with an experienced attorney and consulting with a financial planner or other financial expert to find out what better options exist. Never trust what sales people say to promote reverse mortgages. Do your homework.
4 Replies
Bill Phillips
from Flagstar Bank, Mortgages and Home Loans
Absolutely
David Fisher
from Skyborough Group
Any mortgage requires you to pay your taxes, pay association fees, etc. In fact, most mortgage payments to the bank are calculated to INCLUDE those items in the mortgage payment itself. So, that is not actually "small print". As to having to live there, well, Ok, good point. But for seniors that may be an Ok requirement and the benefits of a RevMortgage are NO PAYMENTS at all (except taxes, association fees, which you have to pay anyway.) It is a choice to accumulate the interest for the period - could be several years - into the final payoff when the people die (or surrender living there). So, it is a matter of what's good for borrower now vs. what estate they wish to leave behind in death. Valid choice and one easily decided upon.
...
Ron Kent Hooper
from Ron Kent Hooper, Attorney
Always remember that Arizona has strong consumer fraud laws that are enforced far more when the fraud is in writing. Read the fine print and make sure that the promises of salesmen are not contradicted or contrary to the fine print in agreements they want you to sign and disclaimers made by companies. Quoting a law professor, oral agreements and promises are not worth the paper they are not printed on.