After recently tackling a series of potential pros and cons that seniors can consider in relation to a reverse mortgage loan, CBS News has devoted more of its online real estate to answering some basic, essential questions about the reverse mortgage — particularly the Home Equity Conversion Mortgage (HECM) — and how it could fit into a senior’s retirement plan.
While many of the statements in the newest CBS column will not break any new ground when it comes to the overarching reverse mortgage narrative as industry professionals understand it, the additional space that the outlet is devoting to the topic does come with a generally pragmatic appraisal for any seniors who may come across the information.
“Reverse mortgages can be helpful if you need extra income in retirement,” the column reads. “They also help free up cash flow, as they eliminate your monthly housing payments. A reverse mortgage isn’t a good idea if you don’t have the money to cover insurance and taxes on your property. HECMs require borrowers to stay current on these charges while they live in the home. Failing to do so could lead to foreclosure.”
Foreclosures that result from lapsed tax, insurance or other homeowner fees is also a noted concern of senior advocates, most recently noted by National Consumer Law Center (NCLC) attorney and reverse mortgage subject matter expert Sarah Bolling Mancini during an event hosted by the U.S. Department of Housing and Urban Development (HUD)’s Office of Housing Counseling.
“Many reverse mortgage borrowers did not understand at the outset that they were going to have to pay those property charges,” Bolling Mancini said during the event last month. “Because often, the marketing of this loan product and the common understanding [centers around not having] to make any payments. Most people are used to their taxes and insurance being escrowed in their forward mortgage payment, so they’re not used paying those charges directly, and they think of that as a housing payment.”
The latest CBS News column also adds other considerations to the conversation, including the plan for the property after the loan becomes due and payable as well as the choice of which lender to ultimately do business with.
“If you’re considering a reverse mortgage, make sure you have a plan for your property should you pass away,” the column says. “While you can still leave the home to an heir, they will be responsible for any loan balance you leave behind. This might mean paying off your reverse mortgage out of pocket or, in many cases, selling your home to repay the lender. In most cases, the balance will come due in 30 days.”
Read the column at CBS News.