Reverse Mortgage Mistakes Too Common: Government
So why are so many reverse-mortgage borrowers so reckless? Economic conditions and the slow to recover housing market are probably one reason. People who need money and cannot sell their homes, or feel prices are too low, may resort to reverse loans out of desperation. Others may find the chance to tap equity without monthly payments irresistible. The CFPB worries that many homeowners have been conned by lenders seeking big fees, another of the reverse mortgage's shortcomings.
Before choosing a reverse mortgage, the homeowner should weigh alternatives like taking out a standard mortgage with payments, downsizing or getting a home equity installment loan or line of credit. The reverse mortgage is best kept as an ace up your sleeve -- the income source to tap late in life when everything else is gone.
--By Jeff Brown