Reverse mortgages often advertised but are they safe?
• Q: Are reverse equity mortgages safe? I’ve heard of them but my credit union doesn’t offer them and I can’t find a bank that does. That makes me think they may be a scam. What can Action Line tell me?
M. A.,
Miami
• A: Reverse mortgages are legal and safe — as long as you do your homework. For many seniors who own their homes and want to stay there, they can be a sensible solution to handling increasing property taxes and insurance.
With a reverse mortgage, you borrow money and pledge the equity in your home as collateral. You can receive a lump sum or monthly payments and you never make another house payment as long as you are permanently living in the home. When you die, or if you sell the home, the loan must be paid back in full. (A consequence of this is that your heirs cannot expect to receive the worth of the house.)