A reverse mortgage taken too early could be a mistake, a New York Times article published this week points out. Gathering input from consumer advocates, the Times addresses what it finds a potential downside to people taking reverse mortgages at a younger age—a phenomenon recently outlined in a MetLife Mature Market Institute/National Council on Aging study.
Featuring input from two reverse mortgage professionals, Mario Martirano of Residential Home Funding Corporation and Kelly Sabino of US Mortgage, the article also points to the reasons people are taking reverse mortgages at a younger age, namely to pay off debts or avoid foreclosure.
Even though the minimum age for taking out a reverse mortgage has been set at 62, many industry experts feel it is too young.
“It’s a bad idea,” said Judith Grimaldi, a lawyer in Brooklyn who specializes in representing the elderly. “You have too much life ahead to encumber your most important asset.”
Ms. Grimaldi recalled a New Jersey couple who took out a reverse mortgage in their 60s. Now in their 70s, they have no equity left in their home, which means they cannot afford to move out and buy another. Under HECM-insured reverse mortgages, borrowers must keep current with property taxes and insurance.
…Homeowners who wait until at least age 72 to take out a reverse mortgage will get considerably more, Mr. Martirano said, though he noted that some borrowers cannot wait. They may use a reverse mortgage to dig themselves out of a financial hole, or even to help prevent foreclosure, so long as they have enough equity in the property. “We do a lot of them for foreclosures,” he said.
Read the original article.
Written by Elizabeth Ecker