Celebrity financial adviser Suze Orman said she expects reverse mortgages “to become increasingly popular,” in a column this week at CNBC.com.
In her column titled “Reverse Mortgages: Know the Risks and Rewards,” Orman presents advice regarding reverse mortgages, explaining the pros and cons. In an excerpt from her new book, she says, “In the coming years I expect reverse mortgages to become increasingly popular among retirees who are eager to find extra income.”
She cites the economic downturn as reason for a growing number of eligible borrowers who have sought advice about reverse mortgages. “Yields on bank and credit union deposits, as well as short-term Treasury bills, are below 2%. It’s hard to make ends meet with that paltry payout.”
In her advice, however, Orman stresses the importance of understanding the taxes and insurance payments borrowers need to make. “It is very important to understand that after you take out a reverse mortgage you will still be responsible for paying the property tax, the insurance premium, and all the maintenance costs for your home. If you can’t continue to cover those costs you will risk losing your home to foreclosure,” she writes. “I ask every retiree—and the grown children of retirees who are looking out for the best interests of their parents—to be very carefuI.”
In the past, Orman has discussed the option of a reverse mortgage for those whose investments lost value as a result of the recession.
Written by Elizabeth Ecker