Reverse Mortgage Ads

The Reality In Reverse Loan Advertisements

Chances are you’ll see appealing images of youthful retirees on the golf course or experiencing other recreational activities in a reverse mortgage advertisement. A reverse mortgage is a specific type of loan which enables  property owners 62 and older to borrow against the accumulated equity inside their homes. The mortgage has to be paid back once the borrower passes away, moves, or no longer resides in the house.

Seniors pointed out the ads made reverse mortgages appear to be a great way to travel around and enjoy retirement while they were still young and active. However Americans live longer, more active lives than previously. Reverse mortgage borrowers could outlive their loan funds by borrowing without careful planning.

Reverse mortgage ads do not always tell the full story, so consider these facts when you see ads:

1. A reverse mortgage is definitely a home loan, not a government benefit

Reverse mortgages have fees and compounding interest that needs to be repaid, just as other mortgages. With most reverse mortgages, federal insurance guarantees that borrowers will get their loan funds if their mortgage lender has financial difficulty or if their mortgage balance exceeds the value of their house. Having said that, borrowers pay for this insurance and it’s not a government benefit.

2. You can lose your house with a reverse mortgage

When a reverse mortgage advertisement says you will retain ownership of your home, or you could stay there as long as you wish to, don’t take these messages at face value. All these statements are true only if you continue to meet all conditions of the reverse mortgage. If you ever get behind on your property taxes or home insurance, are absent from your house for more than six months, or are not able to fulfill other conditions, you could trigger a loan default. If you don’t take care of the default in time, servicer could foreclose on your home. Sometimes these conditions are listed in fine print, but not always. If you have a question about reverse mortgage specifications, talk to a HUD-approved housing counselor.

3. Without having a good strategy, it is possible to live longer than your mortgage money

Having seen a reverse mortgage advertisement, it might seem a reverse mortgage guarantees your financial security regardless of how long you live. People are living longer today than they were merely a generation ago. Be certain to have a financial plan set up that accounts for a long life. That way if you need to tap into your home equity, you won’t do it too early and risk running out of retirement resources later in life.