A Reverse Mortgage could leave you homeless!
You may have seen the commercial on TV. A celebrity spokesperson talks about how seniors could receive additional income by taking out a reverse mortgage on their home. You wonder if this is right for you or possibly an older relative. You might have heard of a friend or relative who got a reverse mortgage and as far as you know they’re doing ok. How bad could it be? Unfortunately, reverse mortgages are costing many seniors their homes and leaving them with nowhere to turn.
Reverse mortgages are essentially a loan given to you on the equity of your home. They are typically available to those who are 62 or older. No payments are required to be made until the person either moves out of the home or dies. However, unlike a regular mortgage, with a reverse mortgage, you need to jump through several hoops to make sure the loan doesn’t go into default. You need to maintain things such as property taxes and insurance for your home, If either lapse, the lender could foreclose on the home. While that sounds easy enough to maintain, an illness or death of a spouse could leave someone unable to keep up with paperwork which could result in the loss of their home.
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According to one report, there are 15,000 reverse mortgages that are in danger of defaulting in the state of Florida alone. From 2012-2017, over 16,000 homes went into foreclosure in the Sunshine State after taking out a reverse mortgage. Reverse mortgages may solve a short-term income problem but many experts say that in the long run doesn’t provide any real financial security.
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