New Survey Reports Reverse Mortgages Do NOT Help Seniors Elderly Homeowner
Is a Reverse Mortgage Good for Elderly Homeowners? No. In plain English, a reverse mortgage is nothing more than an equity loan high fees, complicated rules and mandatory financial counseling. But a Reverse Mortgage has many hazards and fine print earning it the name, ‘Loan of Last Resort’.
A reverse mortgage is an increasingly popular option for older Americans to convert home equity into cash. Money can then be used to cover home repairs, everyday living expenses, and medical bills. Instead of making monthly payments to a lender, the lender makes payments to the homeowner, who continues to own the home and hold title to it.
According to the National Reverse Mortgage Lenders Association, the money given by the lender is tax-free and does not affect Social Security or Medicare benefits, although it may affect the homeowners’ eligibility for certain kinds of government assistance, including Medicaid.
WARNING
If you fail to pay insurance and property taxes, the reverse mortgage is deemed in default and the owner is in danger of foreclosure. Consider selling your house outright and use the proceeds to invest in a safe, secure rate of return. Use our simple seller questionnaire to see if and how we might be able to save you time and money by cashing you out.
TOUGH RULES & FINE PRINT
Homeowners must be at least 62 and own their own homes to get a reverse mortgage. No income or medical requirements are necessary to qualify, and they may be eligible even if they still owe money on a first or second mortgage. In fact, many seniors get reverse mortgages to pay off the original loan.
In a report to Congress, the Consumer Financial Protection Bureau warned that borrowers were increasingly using reverse mortgages at younger ages to pay off debt, even before they retire.
Some widowed spouses are also finding themselves in dire situations after taking out reverse mortgages without being told of the risks. “A lot of people thought they had enough socked away, including proceeds from the reverse mortgage,” says Sue Hunt, director of reverse mortgage counseling at CredAbility, a nonprofit credit-counseling service based in Atlanta. “But they didn’t count on how long they were going to live and they ran out of money.”
the heartbreak that these complex loans — which allow homeowners to convert part of the equity in their homes into cash — have brought to a number of homeowners.
A reverse mortgage is repaid when the property is sold or the owner moves. Should the owner die before the property is sold, the estate repays the loan, plus any interest that has accrued. Reverse mortgages are often considered a loan of last resort for older retirees who worry about outliving their savings or who want to finance a comfortable lifestyle. That’s where they get into trouble.
UPDATE:
On Sept. 30, 2013, a federal trial court in Washington, D.C., ruled that HUD violated federal law when it did not protect surviving spouses of holders of reverse mortgages. Many took out loans too soon and depleted their home equity early on in retirement, leaving them unable to pay their annual property taxes and insurance. Others now risk losing their homes after aggressive mortgage brokers failed to disclose the terms of the loans.REVERSE MORTGAGE HAZARDS
If you’re hit with unplanned expenses or skyrocketing medical bills instead of taking out a reverse mortgage contact us to see if and how you can save you time and money by selling your house to America’s most trusted Housebuyer™ Scott FladHammer.
In some circumstances Housebuyer™ can also cover all of the closing costs and taxes including attorney fees and work to a time-frame that’s convenient for you. If your house qualifies and you’re flexible on price or terms, we’ll schedule a time to come out and make you an offer to buy your house in one hour or less, Guaranteed!*
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