“Is a reverse mortgage right for me?” That’s the question more and more senior homeowners are asking. As reverse mortgages gain new popularity, we hear that question all the time at our Life Planning Seminars. But as frustrating as it may seem, the answer to the question is, “It depends.” There’s simply no “one size fits all” answer to questions about reverse mortgages.
But one thing is for certain: you can’t rely on reverse mortgage advertising for clear information. That’s the conclusion from a new report put out by the Consumer Financial Protection Bureau (CFPB) and reported on the AARP blog. Read the full article here. It seems that advertising for reverse mortgage typically leaves seniors confused about the loan terms and unaware of the risks.
According to the article, the CFPB conducted focus groups among seniors in three cities. All the participants reported seeing ads for reverse mortgages, sometimes many times a day, often featuring celebrity spokespeople to add credibility. But these consumers came away with many misconceptions about these complicated financial instruments. Some didn’t understand that a reverse mortgage is a loan that will have to repaid when the homeowner sells, moves or dies. Other seniors heard the term “tax-free” and assumed they would no longer have to pay property taxes. There was also great misunderstanding about fees and interest rates.
“We want older Americans to be aware of certain factors when they see these ads,” said CFPB Director Richard Cordray. He said the level of misunderstanding among seniors about reverse mortgages was “concerning,” particularly considering that seniors are the target audience: only people age 62 and older are eligible to apply.
So, is a reverse mortgage right for you? There’s really only one way to find out: sit down with an expert, someone you can trust who will give you the full story and evaluate your situation objectively. A reverse mortgage could be a financial boon – or a financial trap! Contact us at Aging Options and we will gladly refer to you a qualified expert in the growing field of reverse mortgages.
(Originally reported at blog.aarp.org)
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Link to aarp.org