Reverse mortgages aren’t nearly as bad as their naysayers make them out to be, but they are also not quite the simple retirement solution pitched by some national advertising campaigns, says U.S. News and World in a report this week.
Recent changes to the Federal Housing Administration-insured Home Equity Conversion Mortgage program mean the borrowers can access less, U.S. News writes, in explaining the new restrictions placed on upfront draws for some borrowers, though it does not fully explain the new upfront draw restrictions for fixed-rate reverse mortgage borrowers.
It also means borrowers may need to pay more to access their reverse mortgage funds, U.S. News writes.
The article describes the changes as having led to “higher fees,” though it does not specify that the higher costs faced by some are due to mortgage insurance premiums having risen for some borrowers and fallen for others—depending on the type of loan and payment option the borrower chooses.
The writer describes the non-recourse property of the HECM loans as well as the program changes and some of their added protections.
Ultimately, he concludes that reverse mortgages are somewhere in between their T.V. appearances and some of the negative perceptions that have been held historically.
“The bottom line: Reverse mortgages might not be the “safe, simple solution” to retirement income that the TV spokespeople would have you believe, but they probably aren’t as evil as the naysayers make them out to be, either,” he writes. “The reality is probably somewhere close to the middle.”
Written by Elizabeth Ecker