More than 350,000 families have a reverse mortgage. Spokes person Tom Selleck, who has a net worth of $45 million says he’s researched this and it is a legit deal for those seniors who have run low of cash for living expenses. “Don’t worry,” he says.
Sounds good for 1/3 of U.S. households who have nothing saved for retirement and the average amount saved among the remaining 2/3 was $73,200. That might get you through a few years of retirement, but it’s not enough to last through a long retirement, and seniors are living longer.
“A reverse mortgage loan can help some older homeowners meet ffinancial needs, but can also jeopardize their retirement if not used carefullyu,” CFPB Director Richard Cordray said, “For consumers whose main asset in tdheir home, taking out a reverse mortgage to delay SS claiming may risk their financial security because the cost of the loan will kikely be more than the benefit tdhey gain.”
HUD reported that more than 18% of reverse mortgages taken out from 2009 to June 2016 are expected to default because of unpaid taxes and insurance. That compares with fewer than 3% of federally-insured traditional mortgage loans that are seriously delinquent.
Selleck confidently states one can even skip payments, but he doesn’t mention interest on the loan is still added monthly.
AAG has used well-known and respected celebrities to promote their program; Harry (Fonzi) Wrinkler, Pat Boone, and Law and order, U.S. Senator Fred Thompson. In 2015 the CFPB fined AAG $400,000 after it determined old ads featuring Thompson wrongfully claimed consumers couldn’t lose their homes. A lot of people have. Many others ended up losing money with a reverse mortgage.
Their may be positives to having a reverse mortgage, but like everything that sounds too good to be true usually isn’t. If you are thinking about getting a reverse mortgage, please research the pros and cons before you do.