AARP’s Take on Reverse Mortgages
The American Association of Retired Persons, commonly known as AARP, is an organization that dedicates itself to empowering and educating senior citizens on a variety of topics. With a member base of approximately 38 million, the AARP has a significant reach.
When it comes to reverse mortgages, the AARP has published several articles on the subject, many of them presenting reverse mortgage as an option that should be chosen with caution. This is understandable, since reverse mortgages are unlike the home loans we’re most familiar with and they are certainly not for everyone.
“Reverse mortgages are growing in popularity as older adults tap their home equity to help them maintain their standard of living in retirement. But these loans come with potentially serious risks and AARP has been working for years to educate older homeowners on reverse mortgages, so they don’t get into trouble.” – From a 2012 AARP Blog post by Carole Fleck.
It is true that a reverse mortgage may cause serious issues for homeowners who don’t fully understand the program’s terms; however, reverse mortgages can be an extremely beneficial part of an overall retirement plan when the terms are understood and can be followed without hardship for the home owner. The key is to arm yourself with knowledge and approach the idea with a level head.
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Some examples of situations that create issues for seniors with reverse mortgages could be:
- They were pitched a sale for something they couldn’t afford (perhaps a timeshare or luxury vehicle) and the salesperson suggested taking out a reverse mortgage as a way to pay for it.
- They can no longer afford to pay for their day-to-day living expenses like utilities, groceries, gas and other common costs.
- They use their funds from a reverse mortgage to pay for their living expenses but do not have enough left over to pay for their property taxes and insurance.
What is your reverse mortgage for?
When seniors use their reverse mortgage payments to pay for life’s day to day costs, they are running the risk of outliving their reverse mortgage. In other words, their equity may become tapped out before they die or find some other viable solution to their financial burdens.
Contact the Reverse Mortgage Division to review your options and find out if a reverse mortgage is right for you
Related Information: What types of licenses and certifications do reverse mortgage lenders need?
Learn more about how people are using home equity conversion mortgages for purchasing homes:
Please keep in mind that the reverse mortgage industry in constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines.