Financial Tip of the Week from the Iowa Bankers Association:
Reverse mortgages allow seniors to convert part of the equity in their home into cash without having to sell the home or pay additional monthly bills. Reverse mortgages are very different from other types of loans, and the risks to the borrowers are unique. The Federal Trade Commission (FTC), the nation's consumer protection agency, encourages seniors to get all the facts on how reverse mortgages work before cashing in on their home's equity.
The FTC emphasizes that if seniors don't understand the cost or features of a reverse mortgage or any other product offered to them – or if there is pressure or urgency to complete the deal – they should walk away. Seniors may also want to seek the advice of a family member, friend or another trusted resource.
If you or a senior in your life have considered a reverse mortgage, there are plenty of online resources from credible organizations that provide information on these types of loans.
More information from the FTC is available online at http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea13.shtm. The U.S. Department of Housing and Urban Development also makes information available at www.hud.gov/offices/hsg/sfh/hecm/rmtopten.cfm.
The AARP Foundation's Reverse Mortgage Education Project also provides seniors with information needed to make informed decisions about reverse mortgages and other, less costly, alternatives. AARP has also developed an article, "5 Questions to Ask Before Considering a Reverse Mortgage," that may be helpful. More reverse mortgage information from AARP is available at http://www.aarp.org/money/personal/reverse_mortgages/.
Information provided by the Iowa Bankers Association (IBA), representing banks and thrifts in the state. For more information go to www.iowabankers.com.