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Seniors considering reverse mortgage should perform diligence 2009-12-30 Reverse mortgages are complex instruments that require forethought and due diligence, a columnist said recently in the Seattle Times. According to real estate expert Kenneth R. Harney, federal regulators are pushing reverse mortgage lenders to ensure that applicants are well-informed about the costs and obligations that a reverse mortgage imposes. In advance of new federal or state rules offering increased consumer protections, Harney said, consumers must educate themselves about the mortgages. And people should be wary of come-ons that downplay the fact that reverse mortgages are loans that must be repaid. Some marketing materials even call reverse mortgages "government benefits," Harney added. While some are government-insured, they shouldn't be referred to as benefits. "When properly understood … reverse mortgages can provide money to supplement retirement income, pay for uninsured medical expenses and keep homes in good repair," Harney wrote. But reverse mortgage borrowers must understand that they will be responsible for keeping up their homes and paying property taxes. And, unlike regular home mortgages, reverse mortgage loans may not include an escrow account that pays tax and insurance bills. Ultimately, Harney said, homeowners should understand "the inner mechanics of the various reverse-mortgage options" before making an application.  |
