Reverse Mortgages Can Provide Seniors With More Than Money

They can help you acquire your dream home and protect your biggest asset

K M Brown

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Photo by Tierra Mallorca on Unsplash

I know you’ve heard a lot of negative things about reverse mortgages. We all have.

In that way, they’re like annuities; both are tools that seniors can use to make their retirement years easier, but unscrupulous companies, agents, and financial advisors have given them a bad name. There are ways to avoid the pitfalls of reverse mortgages though, and when used responsibly, they can provide seniors with a source of income, an asset protection strategy, and even the funds for a new home.

But before I go into the pros and cons of reverse mortgages as I understand them, I want to be clear that I’m not a financial advisor and the ideas I’m offering here should not be construed as professional financial advice. I’ve been thinking about how a reverse mortgage could benefit my husband and me, so I’m learning everything I can about them. If you think a reverse mortgage might be right for you, please do your due diligence based on your own personal situation rather than on mine.

The cons of reverse mortgages

Let’s look at the downside of reverse mortgages first, because when you’re making major financial decisions, having a skeptical mindset can serve you well. They’re expensive to obtain; that’s one strike against them. The closing costs run about twice what they do for a regular mortgage, and those do not come cheap.

There’s a chance the lender might roll the closing costs into the mortgage so that you don’t have to come up with a lump sum upfront, but it’s still a debt against your house. For those of us who worked hard to pay off our mortgages so we could own a home free and clear, that’s a hard pill to swallow. Not that we haven’t gotten pretty good at swallowing pills.

But the biggest complaint about reverse mortgages is that people who take them out can lose their homes to the lender if they don’t pay their property taxes or their HOA fees or if they let their homes fall into disrepair. Some financial gurus rail against them for this reason, and any debt-free crusader worth their salt can weave at least one emotional tale about sweet little…

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K M Brown

Retired psychotherapist who loves a good story. Author of From Fear to There: Becoming a Confident Traveler https://tinyurl.com/26uhya