Exploring a reverse mortgage

Last update: September 6, 2008 - 4:18 PM

EXPLORING A REVERSE MORTGAGE

Consider options: A traditional mortgage, home equity loan or line of credit might prove best.

Consider costs: Weigh high upfront costs in reverse mortgages. One expense is "non-recourse" insurance, so if you collect more in payments than your house is worth, your heirs don't pay that balance.

Beware of sales gimmicks: Be especially wary of a broker trying to sell other financial products, such as insurance policies, at the same time.

Beware of scare tactics: Seniors have complained that brokers call them relentlessly, or use fear of financial uncertainties if they don't buy the mortgage.

Get legitimate help: The law requires all seniors to have an informational counseling session before buying a reverse mortgage. For a list of counselors near you, go to www.hud.gov/offices/hsg/sfh/hecm/hecmlist.cfm or call 1-800-569-4287.

Slow down: If you're hesitant for any reason, take the time to get help from an independent adviser.

Source: Minnesota attorney general's office

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