reverse mortgage deal

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Q: I’ve seen commercials on TV recently for reverse mortgage deals. Are they legitimate? Also, how much money would someone receive on a house worth $200,000? – O.S., Hope Mills


A: You should carefully consider any financial deal, including – and perhaps especially – those you see in television commercials.


Generally speaking, reverse mortgage deals are indeed legitimate. In fact, the federal government is among lenders of such mortgages.

Reverse mortgages differ from regular home loans because you don’t have to pay it back as long as you are living in your home. So you get cash from the equity in your house without having to worry about the monthly bills.
The Federal Trade Commission’s website has information about reverse mortgages. Read here.

“The loan is repaid when you die, sell your home or when your home is no longer your primary residence,” the site says. “The proceeds of a reverse mortgage generally are tax-free, and many reverse mortgages have no income restrictions.”

You have to be 62 years old or older to qualify for a reverse mortgage. The loans are offered by state and local governments, the federal government and private companies.

As for how much money you might receive from a $200,000 home, that is tough to say. The FTC says the amount you can borrow with a reverse mortgage depends on several factors, such as your age, the type of reverse mortgage you select, the appraised value of your home and current interest rates.

“In general, the older you are, the more equity you have in your home, and the less you owe on it, the more money you can get,” the FTC website says.
The U.S. Department of Housing and Urban Development has on its website a list of frequently asked questions about federal reverse mortgages. You can find it here.

You also can get free information about reverse mortgages in general by contacting the National Council on Aging at 800-510-0301 or downloading its free booklet here.

“It is smart to know more about reverse mortgages and decide if one is right for you,” the HUD website says.

Regarding those television commercials, the FTC advises consumers to be wary of sales pitches.

“The bottom line: If you don’t understand the cost or features of a reverse mortgage deal or any other product offered to you – or if there is pressure or urgency to complete the deal – walk away and take your business elsewhere,” the website says. “Consider seeking the advice of a family member, friend or someone else you trust.”