In the 50+ housing market, seniors may find themselves with new, unfamiliar options, including reverse mortgages. Available for homeowners ages 62 and older, reverse mortgages are generally only available for homebuyers who have significant equity in their homes. In some cases, homeowners have lived in their homes for many years, but reverse mortgages sometimes work for new home purchases, too.
Unfortunately, the reverse mortgage industry has not always proven to be forthcoming with all the information homeowners need to make informed decisions. The
Equifax Personal Finance Blog contains details that may help in the recent article, “
Reverse Mortgages: What’s New.”
Equifax’s real estate expert, Ilyce Glink, reports that concerns surrounding reverse mortgages have grown so much that the Federal Reserve Board has proposed new protections and disclosures. This is not to say that reverse mortgages are bad; it’s just to say that borrowers need to go into the transactions fully informed.
With the new rules in place, reverse mortgage lenders will be required to provide more accurate, timely, balanced information in their advertisements. A current practice of requiring a reverse mortgage borrower to purchase other financial products, such as life insurance, will no longer be allowed. And before any nonrefundable fees can be charged or a loan can close, borrowers will have to receive counseling.
Glink says that one of the primary concerns is that reverse mortgage borrowers don’t always realize they’re borrowing the money and they (or their estate) will incur an interest charge. Borrowers hear that they can receive money in regular installments or as a line of credit and that the money they owe will not come due until they no longer live in the house. At that point, they will not owe more than the home is worth. But they don’t always have a full grasp of the fees and interest charges that will accrue.
According to Glink, the proposed rules aim to change all that. To learn more about her analysis and to follow her updates on the proposed rules, visit the
