High-profile personal finance writer Michelle Singletary weighed in on the government’s recent reverse mortgage report Tuesday, penning a syndicated Washington Post column with advice for consumers.
A big takeaway from the Consumer Financial Protection Bureau report is that many seniors are confused by reverse mortgages, judging by the 1,200 complaints that the agency received between 2011 and last year, Singletary wrote.
“There are some pros to a reverse mortgage,” wrote Singletary. “But the complexity of the product means you better be just as aware of the cons.”
In addition to double-checking that loan records accurately reflect who is on the mortgage, seniors need to know the risks of not including a spouse, Singletary wrote. She pointed out that older homeowners can borrow against a higher percentage of home equity; however, if the mortgage holder dies, the surviving spouse might face foreclosure if left off the mortgage.
Similarly, adult children or other heirs — particularly those living in the house — need to be aware of potential consequences if the reverse mortgage becomes due, Singletary advised.
She criticized deceptive television ads that make reverse mortgages seem simple. But she also noted that for many seniors, home equity is the only potential source of “big money.” A reverse mortgage is an appealing option to let them tap into that money without selling their residence, she acknowledged.
Click here to read Singletary’s column. In addition to writing the Post’s “Color of Money” column, Singletary authored the book The 21-Day Financial Fast.
Written by Tim Mullaney