While there is still a lot of concern and talk about mortgages overall, there’s another side of the mortgage market that folks should be aware of – the reverse mortgage market.
What’s a reverse mortgage? It’s complicated, but it’s a loan available to those 62 and over that does not have to be paid back for as long as the person lives there. Because there are no monthly payments, the amount owed grows larger over time. As the debt grows larger, the amount of cash that would be available after selling and paying off the loan (the equity) generally grows smaller.
The Senate Aging Committee is examining this issue today, as is a new AARP report that is fresh off the presses. Two things of note from the study: Use of reverse mortgages is growing; over the last seven years, the number has grown nearly threefold. Also, while reverse mortgages can be a promising way to help those who are 62 and over, there are still concerns about high costs and abusive marketing practices.
In these uncertain economic times, it is important for folks to read the fine print and learn the right and wrong reasons to get (and spend) a reverse mortgage. Also, you should talk to someone who knows about this stuff and you can trust before you make any decisions. Check out some good advice on reverse mortgages before you make any decisions for yourself or your parents.
Join or Renew With AARP for Just $16 a Year
- Discounts on travel and everyday savings
- Subscription to AARP The Magazine
- A voice in Washington and in your community
- Free membership for your spouse or partner