A reverse mortgage is a special type of loan for seniors (generally age 62 and older) that pays a homeowner loan proceeds drawn from accumulated home equity. Unlike a traditional home equity loan or second mortgage loan, no repayment is required until the borrower(s) no longer use their home as their principal residence.
The Commonwealth of Massachusetts has a new website to help consumers make wise choices about reverse mortgages (see below). It outlines the pros and cons of obtaining a reverse mortgage, explains the fees and ramifications of obtaining a reverse mortgage and has a list of the approved reverse mortgage lenders in Massachusetts.
Pay particular attention to the section on red flags including:
• Sales tactics involving the required or suggested purchase of annuities, other investments, long term care insurance or other types of insurance policies with proceeds from the loan.
• Sales tactics involving contractors looking for proceeds to pay for home repairs.
• Being advised to transfer title to the property out of you or your spouse's name to qualify for the loan. Understand the legal consequences of title transfers.
• Being advised to have loan proceeds payable to third parties, and not you as the borrower(s).
• Estate planning services that offer to refer you to a lender for a fee or percentage of the loan. You can obtain information on lenders from the Division of Banks and HUD at no cost.
Click here to visit the website.