Categorized | Finance and Mortgage

Reverse Mortgages Not Always the Best Option

Please Share!

Although many elderly homeowners are often exposed to enticing commercials regarding all the benefits of reverse mortgages, they often aren’t given the whole story behind the process.

Reverse mortgages are intended to help those who are over sixty-two years of age by enabling them to use their home equity to pay off living expenses. While it may seem like an attractive idea for most, the truth is that reverse mortgages are often expensive and complicated, and won’t always prevent default. Furthermore, it could also cause the elderly to foreclose on their homes.

Closing costs are often incredibly high when doing a reverse mortgage, and the process will not mitigate one’s duty to pay insurance and taxes on their home. With falling home values, elderly homeowners are seeing a significantly reduced amount of money when filing for a reverse mortgage.

Most people considering a reverse mortgage do not necessarily read all of the fine print regarding the transaction that they are about to make. As such, reverse mortgages tend to leave many elderly homeowners trapped in their situation with little chance of selling their home to fund their retirement.

Because delinquency rates of reverse mortgages are increasing, it is feared that the Federal Housing Administration’s reverse mortgage program will be put at risk. Many seniors use their savings to pay closing costs, which puts them in a position where they cannot afford to pay their property taxes.

Bank of America and Wells Fargo have since stopped their reverse mortgage programs. However, other insurance companies like MetLife have not done so, nor do they plan on closing down their program.

Please Share!

About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

Leave a Reply

Twitter Chat