New York Times and Consumer Reports Articles on Reverse Mortgages and the FHA Proposal to Strengthen Reverse Mortgage Program
Front and side of the Aaron Ferrey House, Kent, Ohio, United States. Built in 1866, it is listed on the National Register of Historic Places. Wikimedia Commons
The following four paragraphs are from a New York Times article, Getting a Reverse Mortgage, but Not From a Celebrity from June 10, 2016:
"So yes, our retirement savings vehicles ought to be better. Until they are, however, home equity may end up being the biggest asset that many people have to draw on in retirement.
"That is where reverse mortgages come in for people who use their homes as a primary residence. If you are 62 or older, you can apply to extract some of that equity in a variety of ways, including through a lump sum or a line of credit. Your age, prevailing interest rates and the amount of equity in your home will help lenders determine what you can borrow. The main feature — which gives the product its name — is that instead of you paying the bank as you would with a traditional 'forward' mortgage, the bank pays you.
"You are still responsible for the money, though (and have to keep up with home maintenance, taxes and insurance). The lender keeps a running tab of the interest and (often expensive) fees, and once you die or move to a nursing home or sell the property, the bank takes back its money (or your heirs write a check to settle the debt and keep the home). Borrowers never have to pay additional money, even if the interest has ultimately added up to more than the home is worth at that point.
"Reverse mortgages are complicated, and things have sometimes gotten messy for borrowers with surviving spouses or heirs who hoped to inherit the home. Federal regulators have tried to fix many of the problems in recent years, and last month, the Federal Housing Administration announced its latest attempt to tighten the rules. Still, anyone considering a reverse mortgage (or who has a parent or relative who is), should dig deep on educational material from the Department of Housing and Urban Development, the National Council on Aging and the Consumer Financial Protection Bureau."
The complete New York Times' article: http://www.nytimes.com/2016/06/11/your-money/getting-a-reverse-mortgage-but-not-from-a-celebrity.html?em_pos=large&emc=edit_my_20160613&nl=your-money&nlid=4010090&ref=headline&te=1
Below: FHA Proposed to Strengthen Reverse Mortgage Program:
New rule to formalize recent improvements and adds new consumer protections for senior borrowers
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