There are a lot of perceived reverse mortgage risks being discussed in the media. Recently, the Philadelphia Inquirer published an article questioning weather reverse mortgages are too big of a risk for seniors. Forbes then published an article rebutting the Philadelphia newspaper’s claims. Certainly there are a lot of pros and cons to weigh when considering a reverse mortgage or any loan product, but fear should not drive a decision. Despite some concerns, borrowers should be aware that:
All reverse mortgage applicants are required to take independent loan counseling from a HUD certified counselor. This counselor is not a lender. Their job is to ensure that the homeowner understands the program.
All mortgage loans require that the homeowners pay property taxes, insurance, and any home owners’ dues on time. Defaults can result in foreclosure. This is not new.
New protections and changes to the reverse mortgage over the last few years have strengthened the product.
In the Forbes article, author Jack Guttentag who also runs the “Mortgage Professor” blog and loan comparison site, offered a more positive view:
“I view driving a car as a lot riskier than taking a reverse mortgage,” he wrote. “When you drive, you have no control over the maniacs on the road, but when you take a reverse mortgage, you are fully in charge of all the risks.”
Learn why reverse mortgage risks should not outweigh the rewards in the full article.