Joining the ranks of other notable publications like The Wall Street Journal and Reuters, NBC News is the latest mainstream media outlet to chime in on reverse mortgages and what borrowers can expect from these types of loans.
An article from NBC News breaks down the basics of a reverse mortgage, covering areas including how these loans work and the costs associated with them.
NBC News also stresses that while reverse mortgages can help solve a “host of problems” for retirees who are house-rich but cash-poor, they also come with some “pretty significant risks.”
“Reverse mortgages are a useful tool for some people,” said Lori Trawinski, senior strategic policy adviser with the AARP Public Policy Institute, in the article. “They can enable retirees to age in place, but we always emphasize that these are loans, and as such, borrowers have obligations.”
The article then goes into detail on the requirement that borrowers stay current on their property taxes, homeowners’ insurance and any other homeowner’s association dues and assessments, as failure to comply with these mandates could send the loan into default and the home into foreclosure.
Since upfront origination and costs associated with reverse mortgages can make them expensive loans for some borrowers, NBC News urges its readers that reverse mortgages might not be the best solution for every borrower.
Cash-strapped homeowners who are using a reverse mortgage as a last-ditch effort to hang onto their home should also think twice, said Sean Keating, a certified financial planner, principal and founder at Patriot Financial Advisors, in the article.
“When an older couple cannot afford to live in the home anymore, getting a reverse mortgage will only delay the loss of the home and will leave them with no assets,” Keating added.
Written by Jason Oliva