When it comes to reverse mortgages, be a smart consumer, writes Fox News contributor Robert Massi in a column this week.
Massi, who has covered reverse mortgages for Fox News in the past, presents major considerations for taking out a reverse mortgage, including references to recent updates such as the financial assessment and non-borrowing spouse protections that have recently been implemented.
“A reverse mortgage is basically a tax-free advance on your home equity,” Massi writes. “For some people, a reverse mortgage can offer financial freedom to enjoy their later years without worrying about income. For others, it can provide much needed help for staying in their homes. The money from a reverse mortgage can be used to provide help in meeting medical or caregiving expenses, or to help defray tax payments or home maintenance costs.”
However, he cautions, there are a few red flags to look out for, as well as details all prospective borrowers should attend to. Those include fees and other costs, and consideration for any spouse or heirs who may either live in the home, or inherit it in the case of the borrower’s passing away.
“You are borrowing against the equity in your home, which means that when it is sold and the reverse mortgage is repaid, there may be very little profit to disburse through your estate,” he writes.
Ultimately, he says, the loan options offer their share of benefits, but interested consumers should shop around, beware of hard sells and potential cross-selling conflicts, and understand the total loan costs and repayment structures.
“Compare fees and costs,” Massi says. “Shop around and make sure you are getting the kind of loan that is right for your situation.”
Written by Elizabeth Ecker