Reverse Mortgages Scam or Legitimate Financial Tool?
I’ve been getting questions about reverse mortgages lately. It’s not surprising. Reverse mortgages are one of those financial planning tools that are very useful for a specific purpose, and for specific people, that has, unfortunately, been sold aggressively to others. Not all reverse mortgages are scams, but you have to understand what you are getting from reverse mortgage lenders when you sign up. In other words, there is a lot more to a reverse mortgage than what you see on that television commercial or Facebook ad. What Is a Reverse Mortgage? Let’s start from the beginning so that we have a solid footing. What is a reverse mortgage? The most common way to explain reverse mortgages is to say that the definition of a reverse mortgage is when a reverse mortgage lender gives you a lump sum of money for the equity in your home and then gets the home when you die. However, this is a little bit deceptive in that there is more to it than that. Let’s look a little deeper to see what is really going on. First, let’s look at a regular mortgage, or a forward mortgage, if you will. With a traditional mortgage, a …