Consumers Union counters Fred Thompson in new video: reverse mortgages aren’t always the answer
By Maureen Mahoney on Thursday, December 11th, 2014
Thinking about getting a reverse mortgage? First, be sure to look at our new video!
Reverse mortgages are loans that can be accessed by homeowners who are aged 62 or over. Consumers can tap into the equity of their home to obtain cash, then pay back the loan when they sell their residence. Sounds great, right?
Not necessarily. Not all consumers are happy with their reverse mortgages. For example, Tina of Santa Barbara, California tells Consumers Union:
“The reverse mortgage which I acquired is slowly, but surely, eliminating the equity in my home. What will I do when the equity is gone and I cannot pay for the loan? I wish someone had cautioned me about this, but I can no longer do anything about it. Moreover, I am elderly and will soon need assisted living or something of the sort, but if I cannot leave my home, what will I do? I am very sorry I signed up for this reverse mortgage; I was not well advised.”
We’re concerned that the cheery television advertisements touting reverse mortgages, which showcase celebrities like Fred Thompson and Robert Wagner, don’t adequately convey the risks of the reverse mortgage. For example, did you know that reverse mortgage holders must continue paying property taxes on their homes? They also risk default if they are unable to maintain the residence. Moreover, as Tina points out, reverse mortgages are likely not a good option for consumers who may need to sell their homes to pay for assisted living.
We’re countering those celebrity advertisements with our own video that outlines some of the risks associated with this financial product. We encourage consumers to get all the facts about reverse mortgages before making a decision – and to consider applying for one only after exhausting all other options.