For seniors ages 62 and older that own or are shopping for Atlanta real estate, reverse mortgages can rescue a dwindling budget because the reverse mortgage lender pays you to continue living in your home. If the scenario seems too good to be true, it’s because seniors and their families may overlook the term “lender” in the previous sentence.
It’s true that reverse mortgage lenders provide a valuable service to many seniors. But the
Equifax Personal Finance Blog points out that these companies are loaning the money, and these loans do not come without cost to the borrower.
The truth about reverse mortgages is that seniors are borrowing against the equity in their home, and they’re paying interest on the loan. Whether they choose to receive the loan all at once, in regular payments or as a line of credit, the seniors (or their estates) will repay the funds – up to the value of the home – once the senior is no longer living in the home.
If they pass, the new rules will require reverse mortgage lenders to provide more accurate, balanced information in their advertising. Lenders will not be allowed to offer a reverse mortgage contingent on the borrower’s purchase of another financial product, such as life insurance. Consumers will be required to receive counseling about reverse mortgages before a lender can charge nonrefundable fees or close the loan. Plus, lenders will have to improve the information they provide to potential borrowers, in terms of format, content, timing and more.