The recession has been especially hard on the nation’s senior population, leading more American’s age 62 and older turning to reverse mortgages to supplement their cash, according to a recent segment from FOX-5 Atlanta.
“It’s not right for everybody, but in certain circumstances, [reverse mortgages] can be a godsend,” said John Adams, FOX-5 Atlanta’s real estate expert.
While reverse mortgages enable adults age 62 or older to tap into the equity in their homes, the financial product does not come without controversy, says FOX-5’s Tacoma Perry.
Much of the controversy the segment refers to relates to the high closing costs commonly associated with reverse mortgages, which could sometimes amount to $15,000 on day one, even though the borrower has yet to see a penny, says Adams.
To ensure that seniors understand the loan, the Federal Housing Administration requires independent loan counseling before closing a reverse mortgage.
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