Reverse mortgage can be recipe for disaster
Reverse mortgages have gone mainstream. The ads encourage seniors to turn their home's equity into tax-free cash they you can use for anything.
"Urging seniors to use the equity in their home like an ATM or credit card, now that's kind of a recipe for disaster," says Andrea Rock, a senior editor with Consumer Reports.
Rock says there's no question a reverse mortgage can be a lifesaver for some seniors, such as those on a fixed income who can't pay the bills and want to stay in their home. But a tapping the equity in your home should not be done without serious consideration.
Lenders say most customers who take out a reverse mortgage are glad they did.
Consumer advocates say these loans can be a nightmare for people who don't understand how they work. For instance, you must keep the house in good shape and pay the property taxes and insurance, or the lender could foreclose on you.
"We definitely think that seniors really consider other alternatives before resorting to taking out a reverse mortgage," Rock says.
The bottom line: a reverse mortgage is costly and complex and not something to be done because some ad suggests it.
For more information
Reverse mortgages can lead to big trouble
AARP: 5 Questions to Ask Before Considering a Reverse Mortgage
AARP: Alternatives to Reverse Mortgages
"Urging seniors to use the equity in their home like an ATM or credit card, now that's kind of a recipe for disaster," says Andrea Rock, a senior editor with Consumer Reports.
Rock says there's no question a reverse mortgage can be a lifesaver for some seniors, such as those on a fixed income who can't pay the bills and want to stay in their home. But a tapping the equity in your home should not be done without serious consideration.
Lenders say most customers who take out a reverse mortgage are glad they did.
Consumer advocates say these loans can be a nightmare for people who don't understand how they work. For instance, you must keep the house in good shape and pay the property taxes and insurance, or the lender could foreclose on you.
"We definitely think that seniors really consider other alternatives before resorting to taking out a reverse mortgage," Rock says.
The bottom line: a reverse mortgage is costly and complex and not something to be done because some ad suggests it.
For more information
Reverse mortgages can lead to big trouble
AARP: 5 Questions to Ask Before Considering a Reverse Mortgage
AARP: Alternatives to Reverse Mortgages