What are the dangers of a reverse mortgage?
There are plenty of dangers of a reverse mortgage.
For starters, there is not enough recognition by the local and federal courts to have had time to thoroughly evaluate how legal they will be in 10 to 20 years.
While there are a host of lawyers who helped write up the initial drafts for the implementation of the reverse mortgage loan, there will eventually be court cases to help unravel the details of just how well they were initially set up.
Under most circumstances, the dangers of a reverse mortgage are the same as those who lend money to allow us to buy a car. The only difference is that we are not being asked to give money, but to receive it.
One of the biggest red flags when it comes to the dangers of a reverse mortgage is that there is an age restriction on the arrangement rather than an equity restriction. If you are 35 years old and you own your own home outright you are not permitted to ask for a reverse mortgage.
However, the 62 year old woman that only bought her house 5 years ago on a 20 year term is permitted to apply and will most likely receive a reverse mortgage. This means that the mortgage companies do not anticipate either having to pay in full or having to ever go to court in order to continue taking over the residential neighborhoods of those who lived to be over 62.
No matter which reverse Mortgage Company you think you will sign with or who that company got to be their own special spokesperson, always have the paperwork thoroughly evaluated by an attorney with legal expertise in real estate law. Your hour with them might be expensive, but it can end up saving your home in the end.
The advertising that the reverse mortgage companies are tossing out into the general public is rather misleading. These advertisements show many healthy, happy people taking care of business because "the house is taking care of them," yet there is no mention of the many dangers of a reverse mortgage that are waiting for them. There is no mention that a reverse mortgage might not be in your legal best interest.
Instead, all you have to do is call for a free DVD and you can be signing on the bottom line within just a few days and receive your first check at the same time. While advertising is not meant to drive business away, but there are more warnings during a birth control pill advertisement than there are on reverse mortgage advertisements.
The idea can be a very tempting one, but nobody should enter into a reverse mortgage agreement without legal representation, not matter how bad the financial future might look. Get all the facts first so that you will be sure you know all of the potential consequences for signing on their dotted line. An informed consumer has very few regrets while a hasty consumer has a whole basement full of them.
If you are in the market for a reverse mortgage make sure to discuss these issues at length with your broker. While you're here be sure to take a look around for more tips and information about reverse mortgages.
If you want to read up more on it I would recommend getting a good reference book on it like: Reverse Mortgages For Dummies