Once risky Reverse mortgages safer in recent years
Some older adults may be wary of reverse mortgages, but in recent years, regulations have been implemented to make reverse mortgages less risky. Still, it’s best for homeowners to consider other options too, such as refinancing or downsizing. Chicago Tribune by Benny L. Kass Reporter.
There have been so many changes to eliminate the risky parts of the Reverse Mortgage in the past five years that financial planner now recommend the safer new reverse mortgage.
Q: I have a friend who owns his home outright. He is experiencing financial difficulty but refuses to look into a reverse mortgage because an attorney friend of his told him to stay away from reverse mortgages. In my opinion, a reverse mortgage sounds like the only way for him to go since he has no wife or children to consider when he passes. Any ideas why people are afraid of reverse mortgages?
A: That’s a very good question. Over the years, I have often written that a reverse mortgage should be the last resort; see if you can get a new loan or refinance your existing mortgage before looking at a reverse.
Why was I so negative? Two reasons: First, the upront costs were very high, and second, all too often there was no regulation and no enforcement against the reverse mortgage lender. For years, celebrities like Fred Thompson, Henry Winkler and Pat Boone were touting the benefits of reverse mortgages, but they were not disclosing all of the facts, all the pros and cons.
However, there have been significant changes in recent years. First, in order to get a reverse mortgage, you now have to demonstrate you have the ability to pay your real estate tax and maintain adequate homeowners insurance. Second, before you can get such a loan, you must talk with a professional housing counselor. You have to know the facts before you can get this kind of loan.
Yes, in your friend’s situation, since he has no immediate family, a reverse mortgage probably makes sense. However, I will continue to strongly suggest that anyone considering a reverse mortgage should look at all the options first, such as refinancing, selling your present home and downsizing, or getting loans or gifts from relatives. Once you have carefully reviewed all options, then make your decision.
Reader response to a recent column on service animals: Just to clarify, a service dog is not for just the blind and deaf. I broke my neck in Iraq and my dog is trained to help me with balance and can pull me 100 yards to find help if I fall.
My response: We often forget about those of you who served — and unfortunately sacrificed — for our county, and we must continue to be understanding and thankful. I received a number of similar emails; if my recent column suggested that service dogs are limited to assist the blind and the deaf, I apologize. A service dog is trained to do work or perform tasks for people with disabilities. That includes the blind and the deaf, but also includes people like the reader above. Other situations in which a service dog may be used: pulling a wheelchair, alerting and protecting someone who is having a seizure and even retrieving medications for someone with a mental illness.
Again, landlords and community associations must allow, without question, a service dog on the premises, even if the rules of the property preclude all animals.
Benny Kass is a practicing attorney in Washington, D.C., and in Maryland. He does not provide specific legal or financial advice to any reader. Readers may email him, but he cannot guarantee a personal response.
Call Scott Underwood; “Alabama’s Reverse Mortgage Guy” for more information on Reverse Mortgages. (205) 908-2993.