Perspectives
by ED CHERRYHOLMES
We have been hearing on the television a lot about reverse mortgages. I have also been reading about them in the newspapers and magazines. I have many questions about how they work. The old line about “If it looks too good to be true, it probably is!” rings true.
If I understand the process, reverse mortgages are open to any person 62 years old who has a clear title to a home. With traditional loans, the homeowner must still make monthly payments to repay the loans. With a reverse mortgage, instead of making monthly payments to the lender, the homeowner receives money from the lender. No payments are due to the lender to repay the loan as long as the home-owner lives in the home.
The following questions need to be raised before a decision is made about taking a reverse mortgage:
1. What happens if the elderly outlive the equity of the home?
2. Who owns the equity remaining after the death of the elderly owners?
3. Who is responsible for keeping up the property while it is being disposed of?
4. Who can legally dispose of the property?
5. Who holds right of possession and final control?
6. Does this preclude heirs from any benefits?
These questions and others cause me to have doubts about a reverse mortgage. I don’t have enough information, but I am skeptical that some elderly person will get a raw deal. I don’t see how a reverse mortgage can work to the benefit of the elderly, but show me if you can.
