U.S. News: Reverse Mortgages Can Help Avoid Foreclosure

As one of five options to help older Americans avoid foreclosure, U.S. News and World Report wrote about reverse mortgages this week. 

Don’t panic, shrink expenses with the help of a housing counselor, look into refinancing and short sales are noted, in addition to exploring the use of a reverse mortgage. 

U.S. News and World writes

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“Consider a reverse mortgage. People older than 62 often qualify for a reverse mortgage. With a reverse mortgage, you receive money from your lender and generally don’t have to pay it back for as long as you live in your home. The loan, plus accrued interest, is repaid when you die, sell your home, or when your home is no longer your primary residence. The proceeds of a reverse mortgage are generally tax-free, and many reverse mortgages have no income restrictions.

However, a significant downside of reverse mortgages is that they come with high closing costs, which often exceed the closing costs of a standard home purchase. As such, they can substantially reduce the value of your home. Nonetheless, this may still be a good option for older Americans who have maintained a substantial amount of equity in their home, says Linda Fisher, a law professor at Seton Hall University who specializes in foreclosures. Fisher recommends talking to a HUD-approved housing counselor or a reverse mortgage counselor. A reverse-mortgage counselor may charge up to $125, but Fisher says it’s a “minimal expense” for being able to keep your home.”

View the original U.S. News article.

Written by Elizabeth Ecker

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  • Is U.S. News and World Report aware of Financial Assessment (It’s comming for real!) or the consequences of forclosure and short sale?  (No FHA financing allowed for 3 years after a foreclosure or short sale, 2 years for conventional)
    A consumer had better really plan ahead if they are considering one of the above options and it is highly unlikely housing counselors are even aware of these consequences so beware of their “good advice” and counsel.

    • hecmvet,

      Housing counselors are more aware than ever of the consequences of short sale and foreclosure than you are willing to give them credit for.

  • How do loan costs reduce the VALUE of a home?  I missed that class among the three courses I took in college on appraisal.   

    We all know the columnist should have said equity but the trouble is what does this person understand.  For example, why does the columnist compare closing costs on a HECM to the PURCHASE costs on a home rather than the SALE costs of the home?  The comparison to purchase is ridiculous unless the HECM being considered is a HECM for Purchase.

    It seems the professor does not understand HECMs require counseling by a HECM counselor. 

    The logic of the arguments speaks mounds about the understanding of the author when it comes to analyzing mortgages, particularly reverse mortgages.  This article might as well have been written by one of our detractors who believes HECMs should be relegated to loans of last resort.

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