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bad things 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 Mortgage Lenders May Be the Big Bad Wolf

Until recently, reverse mortgage originators were not required to check an applicant’s credit or overall financial health — as long as the borrower was at least 62, he or she qualified for a loan. But, recognizing that these were still relatively complex loans, the FHA required borrowers to receive counseling from an HUD-approved agency before taking out a loan. Industry watchdogs have long criticized the efficacy of the counseling, saying HUD’s guidelines were vague enough that even a brief, perfunctory phone conversation qualified as counseling.

Borrowers can choose to take their cash up front in a lump sum, or opt for monthly payments or a line of credit. But the sticking point has always been the fine print: Borrowers still have to pay property tax, home insurance and a “mortgage insurance premium” for the FHA coverage. They also have to maintain the home, meaning major problems like a cracked foundation or a leaking roof cannot go unattended.

2 Senators Question Effects of a Reverse Mortgage Proposal

Advocates for the elderly persuaded federal housing officials two years ago to offer more rights and protections to the spouse of a borrower who takes out a reverse mortgage and later dies.

Now there is concern that a small wording change in the Trump administration’s proposed budget request for the Department of Housing and Urban Development could undo some of those protections — potentially increasing the chances that a surviving spouse who did not sign the mortgage documents could lose a home in a foreclosure .

Two United State senators sent a joint letter to Ben Carson, the secretary of HUD and Mick Mulvaney, director of the Office of Management and the Budget two months ago, seeking clarity on the proposed wording in the budget request. The two — Senator Marco Rubio , Republican of Florida, and Senator Catherine Cortez Masto, a Nevada Democrat — asked whether the agency was seeking to reverse the earlier policy change.

what are the bad things about reverse mortgage ? what makes it a bad choice?

It's really going to depend on your situation. What are your goals, and when do you wish to accomplish them.