As a well established senior citizen, I on occasion get to watch television in the afternoon. If you do that, you are barraged with advertisements, most of them are for medical equipment like walk-in tubs, stair chairs and scooters, followed by cancer treatments and …. reverse mortgages. Fun uh?
Henry Winkler and some obscure former Senator named Fred are the primary spokesmen for reverse mortgages and they make it sound so easy. No payments, tax-free money, you still own you home and more.
What they don’t tell you is that these loans are expensive, but what is really important is they don’t tell you that you can lose your home if you are not careful.
Statistics show that the vast majority of younger seniors who take a reverse mortgage (you have to be at least age 62) spend all of the money in a few years, leaving nothing for later years. In order to avoid foreclosure you must pay your property taxes on time and you must maintain the home to the satisfaction of the lender (where is the money coming from to do that?).
But the greatest risks are these. As soon as the last borrower leaves the home, the money borrowed is due. That means that if a married couple put the loan only in one spouses name and that spouse dies, the loan must be repaid or the house is gone. The surviving spouse is out of luck … and out of a place to live.
But there is more. What if you take a reverse mortgage, spend all or most of the money and then for some reason you need to or want to move? Unless you have the cash to pay off the loan, you either don’t move or you lose your house. You better hope there is equity in your home beyond the outstanding loan so you can buy a new house or you may be trapped.
Bottom line; if Fonzi has gotten you interested in a reverse mortgage, be very careful and get all the facts before you sign on the dotted line.
Related articles
- Reverse Mortgage vs. Home Equity Loan (athomesense.com)
- New Limits on Reverse Mortgages (lawprofessors.typepad.com)
- 6 Things to Ask Yourself Before Discussing Reverse Mortgage Rates (reverse-your-mortgage.typepad.com)
- One Nightmare of a Reverse Mortgage (lawprofessors.typepad.com)
QUINNSCOMMENTARY 
I CONCUR COMPLETELY….i WOULD ARGUE THAT WHAT REVERSE MORTGAGE COMPANIES ARE REALLY BENEFITING FROM ARE SENIORS WHO (UNFORTUNATELY FAILED) TO ADEQUATELY PLAN FOR THEIR RETIREMENT!
NO MATTER HOW YOU LOOK AT IT, IT IS STILL A LIEN OR ENCUMBRANCE ON THE PROPERTY.IF YOU FAIL TO KEEP UP WITH THE INSURANCE OR PROPERTY TAXES ITS BIG TROUBLE ESPECIALLY FOR SENIORS .
THIS REMINDS ME OF THE PHONE CALL I RECEIVED FROM MY MOTHER SOME YEARS AGO. SHE WAS ABOUT READY TO SIGN-OFF ON THE PURCHASE OF AN ANNUITY AT HER BANK. FRANKLY I DID NOT SEE THE BENEFIT FOR HER OTHER THAN A 2 % increase over what she was getting in interest on her cd(s) .When looked into more completely the lock in period for her at 85 years old was ridiculous. And it could take up to 30 months to redeem her initial investment/principal .
When it comes to seniors all that glitters is not gold. Those selling financial products to seniors in my estimation are probably the most predatory of all.
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Regarding ex-Senator Fred (Thompson). The ads always mention that Fred is a former U.S. Senator. I guess the idea is that being a former senator gives him more credibility! Fred was also a former lawyer. And was in show business as an actor for years.
In summary, his credibility apparently rests on his being a ex-politician, a former lawyer, and a washed-up actor.
Where do I sign up?
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Good points
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Hilarious! I wish I had said that!
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Right on, Quinn! – These scams preying on the elderly should be illegal.
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I don’t know anyone that has done this but I always looked at it as “if it sounds too good it probably isn’t”. I went on the website and it looked so risky that I could not believe anyone would do such a thing.
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