Are Reverse Mortgages Safe?
Negative news on reverse mortgages is everywhere. As a result, people are hesitant to get a reverse mortgages and recommend them to loved ones. This leads people to ask, are reverse mortgages safe? Below, we dispel the common rumors and myths about reverse mortgages.
The Beginning of Reverse Mortgages
In 1989 the FHA issued the first Reverse Mortgage. Since that day, the FHA has been working hard to make sure that unscrupulous people do not use these products to take advantage of seniors. To be sure of this, the FHA implemented requirements.
Safety Requirements for Reverse Mortgages
- An FHA approved 3rd party counselor (typically by phone) counsels every senior to make sure they understand all of the terms and details of their loan.
- The FHA requires a financial assessment to meet all the qualifying criteria (see reverse mortgage requirements on this link).
- There are safeguards for eligible spouses of seniors who are not yet 62 or not listed on title. Thanks to these, the non-borrowing spouse (What is that?) is allowed to stay in the home without obligation to pay principal or interest if a borrower passes or is moved to a care facility.