Know the facts about reverse mortgages

Reverse mortgages are being offered as a solution for older homeowners who are exploring ways to tap into the equity built up in their homes.

These mortgages provide money to homeowners with no repayment of funds and interest required until the loan term ends – generally until the borrower no longer occupies the house. Payments can be in the form of a lump sum, a line of credit, monthly payments or any combination of these.

The Better Business Bureau of Mississippi, along with the Federal Trade Commission, suggests that the following facts be considered:

# Reverse mortgages are “rising debt” loans where the interest is added to the principal balance since no payments are being made.

# Most loans have fixed interest rates. However, there are some adjustable rate loans being offered.

# Reverse mortgages typically charge origination fees and closing costs. They also may include insurance or mortgage servicing fees.

# Your legal obligation to repay the loan is limited by the value of your home at the time the loan is repaid (which includes any appreciation in value during the life of the loan).

# Consult with family members, your attorney, and your financial advisor when considering a reverse mortgage.

Three types of reverse mortgages are offered: FHA-insured, lender-insured and uninsured. Costs and terms vary with each type of loan. Consumers should check the features of each type of loan to select the one best suited for their individual needs.

Before signing any contracts, the BBB Mississippi urges consumers to check their Reliability Reports on companies offering reverse mortgages.

Do this online at www.bbbms.org and by calling (800) 987-8280.

The BBB also provides complaint and dispute resolution assistance for consumers seeking recourse or a fair settlement if they feel they have been treated unfairly in the lending process.

Found here.

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2 Responses to “Know the facts about reverse mortgages”

  1. Chuck Helsel Says:
    October 5th, 2007 at 11:19 pm

    Great advice on Reverse Mortgages. Senior Homeowners beware when choosing a mortgage advisor! Reverse Mortgages are going to be the next hot mortgage product for loan orginators looking for business.

    The saving grace is in order to get a Reverse Mortgage, a senior is required to complete a counseling course.

    If you think a Reverse Mortgage may meet your mortgage needs:
    1. Read up on Reverse Mortgages. There are many available free booklets and guides.
    2. Find a lender that specializes in Reverse Mortgage. Make sure they can answer your questions in simple terms. Ask for references of other clients that they provided Reverse Mortgages for.
    3. Do not respond to unsoliciated phone calls or mailers about reverse mortgages. You deserve working with a pro!
    4. Determine if you want to involve your children. They care about your financial well-being and also need to understand the pro’s and con’s of a reverse mortgage.

    Chuck Helsel
    CalPacific Mortgage Consultants
    858-657-1054

  2. Brian Nadig Says:
    October 7th, 2007 at 2:57 pm

    The Reverse Mortgage is the greatest scam perpetrated on America’s Seniors since Congress began taxing Social Security Benefits. After 10 years, the cost of the loan, e.g. interest and closing costs, could easily equaleven or surpass 90 percent of the loan value. The initial cost of a reverse mortgage could be as much as $30000 depending upon loan value and lender.

    The only real beneficiaries of reverse mortgages are the lenders.

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