Seniors cautioned about reverse mortgages

Some seniors struggle financially while trying to age in place. The Financial Industry Regulatory Authority (FINRA) recently advised senior homeowners to proceed with caution before using reverse mortgages to access their home equity. The group warned that a reverse loan--meaning that a bank makes payments to a homeowner instead of the homeowner making payments to a bank--can be a risky financial move.

The transaction is risky because high fees and other problems may frequently occur. For example, reverse mortgages may interfere with a person's intent to leave the property to heirs in a will. The FINRA warning notes that some of the businesses who make the mortgages available to homeowners may profit from the transaction. Thus, the lender or employee working for the lender has a lot of incentive to talk someone into a loan he or she may not need. Nevertheless, with foreclosures rising amid the subprime-mortgage mess, some homeowners who have built up equity over the years may consider a reverse mortgage if that is the only way to avoid losing the house.

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Comments

[Stephen]

Thanks for more info on this subject as I’m going through the process right now. I’m trying to secure the best option for me at the lowest cost and rate.

Stephen
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