Is a reverse mortgage right for you? - Philadelphia News, Weather and Sports from WTXF FOX 29

Is a reverse mortgage right for you?

Posted: Updated:
ATLANTA -

The recession hasn't spared any age group, but it's been especially hard on seniors. More and more Americans 62 and older are turning to reverse mortgages to supplement their cash. But is it right for you?

FOX 5's real estate expert John Adams says a reverse mortgage is a way for seniors 62 and over to be able to tap into the equity of their home, even if they have no income. The bank uses age as a factor in determining the loan amount.

"Then they put that into a complex formula and come up with a number, and say based on the available equity and your age, we can afford to loan you this amount of money," said Adams.

You can take the money in a lump sum, payments, a home equity line of credit or a combination of all three. You don't have to pay it back. The home simply belongs to the bank after you pass away.

"The beauty of that is, for someone who is on a very limited income or no income, it gives them a way to be able to tap into the equity of their home to pay for current expenses," said Adams.

It can also allow people to stay in their own homes longer. But reverse mortgages aren't without controversy. Adams says when reverse mortgages were first introduced there was no government intervention. He says even though the Federal Housing Administration now insures all reverse mortgages, the fees associated with them are still high.

"So let's say you went and applied for one of these, were approved, you closed it and just got a home equity line of credit. You still haven't seen the first penny. You've got a $10,000, $15,000 balance, just on day one," said Adams.

It's why the FHA requires independent loan counseling, so that seniors  understand the loan and are aware of other options.

"It's not right for everybody, but in certain circumstances it can be a godsend," Adams said.

Before you decide a reverse mortgage is right for you, Adams says discuss it with your family and get advice from a financial planner. He also suggests checking with the BBB. As is the case many times, there are mortgage companies that prey on the elderly.
    
For more information on reverse mortgages, click here!

  • Good Day ArchiveMore>>

  • Dine Out for Project Open Hand

    Dine Out for Project Open Hand

    Wednesday, April 23 2014 9:39 AM EDT2014-04-23 13:39:13 GMT
    Head out to the a participating restaurant to celebrate the 22nd anniversary of Dining Out For Life.
    Head out to the a participating restaurant to celebrate the 22nd anniversary of Dining Out For Life.
  • Fox 5 I-Team

    Cheap vs. Frugal

    Cheap vs. Frugal

    Wednesday, April 23 2014 9:15 AM EDT2014-04-23 13:15:25 GMT
    There is nothing wrong with saving a buck, but can you cross the line? There is a difference between being cheap and being frugal.
    There is nothing wrong with saving a buck, but can you cross the line? There is a difference between being cheap and being frugal.
  • Mountain Festival Brings Music, Dancing To Dahlonega Square

    Mountain Festival Brings Music, Dancing To Dahlonega Square

    Wednesday, April 23 2014 9:08 AM EDT2014-04-23 13:08:13 GMT
    The North Georgia town of Dahlonega is best-known for its gold. But this weekend, music will bring more than 50,000 people to the historic town square.
    The North Georgia town of Dahlonega is best-known for its gold. But this weekend, music will bring more than 50,000 people to the historic town square.
Powered by WorldNow

WTXF-TV
330 Market Street
Philadelphia, PA 19106-2796

Phone: (215) 925-2929
Fax: (215) 982-5494

Didn't find what you were looking for?
All content © Copyright 2000 - 2014 Fox Television Stations, Inc. and Worldnow. All Rights Reserved.
Privacy Policy | Terms of Service | Ad Choices