Reverse mortgages are useful for some retirees, but education is needed before seniors should move forward on taking out the loans, says credit counselor Mike Sullivan of Take Charge America in an interview this week with MarketWatch.
Sullivan, who serves as chief education officer for the Take Charge America, details five considerations that should be taken into account by anyone considering a reverse mortgage including the fees, ongoing responsibilities such as ongoing taxes, insurance and home maintenance, and the implications of taking a lump sum upfront.
The segment also notes that the borrower continues to own the home throughout the life of the loan, and that the heirs inherit the home and repayment responsibility in the case where a borrower passes away.
Because there are many details and considerations, counseling is an important part of the process, Sullivan says, and it takes time.
“We find a typical counseling session takes at least two hours,” he says. “All of the costs and implications have to be explained. Most coming to counseling have already made a decision.”
Written by Elizabeth Ecker