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about reverse mortgages

Reverse Mortgage Tips

Vera Gibbons spoke with Julie Chen about when is a good time for a reverse mortgage and what to look out for.

Reverse mortgages gaining legitimacy, if not popularity, in region

Everse mortgages still have a negative connotation for many. Stories of senior citizens losing their life savings through such transactions permeate the internet, coupled with headlines about “the reverse mortgage con” strike fear into the hearts of homeowners seeking to draw value from the investment in their house.

But those fears are mostly misplaced, according to Nick Buscaglia, senior vice president for residential mortgage at M&T Bank, which maintains branches throughout Fairfield and Westchester counties. “A lot of that is misinformation that dates back to when they first appeared in the ’80s,” he said.

“But over the past several years it’s become a lot better,” in part by the strict code of ethics established in 1997 by the National Reverse Mortgage Lenders Association, Buscaglia said.

“Of course,” he added, “there’s always the caveat of knowing who you’re dealing with and making sure it’s the right product for you.

Reverse mortgages have their place

In his recent commentary, “Don’t fall victim to the reverse mortgage con” (March 1), Art Ernst shows a fundamental misunderstanding of how reverse mortgage loans work and the long-term financial benefits of incorporating home equity into an overall retirement financial plan. Research published by the Society of Actuaries, for example, shows how regular payments from a reverse mortgage can help households stretch their retirement funds to meet the demands of longevity, making the loan a valuable option even when you factor in the initial cost of getting it.

Mr. Ernst begins his criticism of reverse mortgages, which more than a million senior homeowners have used to supplement retirement savings and age in place, with a straw man argument about the short-term cost of the loan. Reverse mortgages were never intended to be used in this manner and rarely, if ever, are. The author's biggest objections to reverse mortgage loans rest erroneously on the myth that with a reverse mortgage, the bank owns or eventually takes ownership of the home. This is not true; borrowers never give up title or ownership of their property.

What is the downside of reverse mortgages?

My in-laws are elderly (in their mid and late 80s) and own their home outright. The in home care expenses for my father in law are mounting and reverse mortgaging their home seems to be the answer.

This product has become ever more popular with the aging society. Because of this these loans are changing almost daily. The downside to this type of loan is your house is appreciating after you lock in the payment rate.