Senior citizens and elders should not be taken in by advertisements extolling the benefits of reverse mortgages. Reverse mortgages can actually be bad for senior citizens and elders. A reverse mortgage is a loan that seems, on the surface, perfect for elders who need financial help with paying for living expenses and other costs. A reverse mortgage is when seniors take equity out of their home to help pay for living expenses. The loan is due when the senior dies, moves out of the house, or fails to maintain the home and pay homeowner’s insurance and property taxes.
Contrary to television advertisements extolling the benefits of a reverse mortgage, reverse mortgages can be extremely costly and senior citizens and elders may actually lose their homes. Lawsuits have been filed in Illinois against reverse mortgage advertisements for misleading information. Cease-and-desist orders issued by the Commissioner of Banks in Massachusetts have been sent to reverse mortgage firms for operating without a license and to lying about seniors about them being able to keep their homes. Many more lenders have been warned and placed under investigation for advertising misleading information regarding reverse mortgages to senior citizens and elders.
The following is a list of why senior citizens should not take out reverse mortgages unless they have no other choice:
- Reverse mortgages are expensive because seniors have to pay initial fees and ongoing fees.
- Initial fees include:
- Initial mortgage insurance premium
- Origination fee
- Closing costs
- Counseling fee
- Ongoing fees include:
- Monthly mortgage insurance premium
- Servicing fee
- Initial fees include:
- Equity is removed from seniors’ homes, leaving seniors potentially unable to sell their house if they ever need to move out for any reason, such as being unable to live alone.
Before taking out a reverse mortgage, make yourself knowledgeable of the associated costs and risks. Consult with friends and family and thoroughly investigate and research alternative options such as state and local programs in your area.
Contact The Evans Law Firm, Inc. at 415-441-8669 or via email at firstname.lastname@example.org to speak to one of our California estate planning lawyers if you need help figuring out how to handle your property in case something happens.