Specialist discusses pros and cons of reverse mortgages

Specialist discusses pros and cons of reverse mortgages

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"It's a mortgage without a payment, so you get the benefit of receiving this cash that you can use to pay off any expenses," said Carl Bruner, a reverse mortgage specialist. "It's a mortgage without a payment, so you get the benefit of receiving this cash that you can use to pay off any expenses," said Carl Bruner, a reverse mortgage specialist.

By DON DARE
6 On Your Side Consumer Investigator

KNOXVILLE (WATE) - On TV lately celebrity spokesmen, including former Sen. Fred Thompson, have touted companies that offer reverse mortgages.

You must be 62 or older to qualify and your home must be your primary residence.

Reverse mortgages have been around for nearly 50 years, but their popularity has increased dramatically over the last few years. That is partially due to so many commercials, but also because like a traditional mortgage, a reverse mortgage allows you to borrow against your home equity, so it gives those 62 or older extra income to supplement their retirement savings.

"It's a mortgage without a payment, so you get the benefit of receiving this cash that you can use to pay off any expenses," said Carl Bruner, a reverse mortgage specialist. "You can do whatever you want to with the home, you can't lease it, you have to live in it it has to be your primary residence. When you pass away, it goes to your heirs."

Many say the arrangement offers older homeowners peace of mind.

"Peace of mind comes from having sufficient income to cover your expenses. We don't look at the credit history, we don't look at income. You just have to have equity in your house and be 62 years old," Bruner said.

But a reverse mortgage is not right for everyone.

"If you have a dependent, a disabled child still living with you, and you're concerned about where this person is going to live when you pass away, you want to make sure they have a place to live. When this mortgage matures at your death, it has to be paid off," he said.

It also means leaving less behind for your heirs.

"Well, with a reverse mortgage you are spending your kids inheritance," Bruner pointed out.

There are also fees and costs tied to a reverse mortgage.

"Of course, this is an FHA loan. The only difference in a conventional loan and an FHA loan is mortgage insurance and this protects the heirs," he said.

When analyzing reverse mortgage pros and cons, the right decision all comes down to personal circumstances.

And, because of the complexity, those considering a reverse mortgage must see a HUD-approved counselor who will answer questions and guide them in the right direction. 


If you have a consumer issue, call the 6 On Your Side Hotline at 865-633-5974 or email ddare@wate.com.

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