Jim WinsettQ. My husband would like to get a reverse mortgage, but I’m not so sure. Does the BBB have information we should consider before we make a decision?
A. If you have been within earshot of a television or radio in the last year, then you have no doubt heard about reverse mortgages. While the term seems to be self-explanatory, most consumers have no idea how they work and being uneducated is dangerous territory when it comes to making a major financial decision.
A reverse mortgage allows homeowners to convert part of the equity in a home to cash without having to sell the property. In other words, it is a loan against your home that you do not have to pay back for as long as you live in your home. Due to the attractiveness of these loans, some senior citizens are being charged excessive up-front fees for services that are generally available free of charge, or at a very low cost through the Department of Housing and Urban Development (HUD).
The Better Business Bureau (BBB) advises consumers to use caution if approached with the opportunity to obtain a reverse mortgage. Take the time to understand the requirements, consider all the factors involved, and learn what free resources are available to help make an informed decision. Most importantly, do not be swayed by celebrity spokespersons endorsing this type product until you have all of your questions answered.
The BBB provides the following tips when considering a reverse mortgage: