Question 1

Why do I need to get counseling before applying for a reverse mortgage?

Accepted Answer

The Department of Housing and Urban Development requires counseling for interested applicants to help them understand the pros and cons of reverse mortgages, how they work and how the borrower can receive the loan proceeds. Counseling also explains how this type of loan may affect a person’s eligibility for other government programs, such as Supplemental Security Income or Medicaid. Additionally, it helps borrowers determine whether a reverse mortgage is the best option available to them.

Question 2

Are reverse mortgages a scam?

Accepted Answer

No, reverse mortgages are not a scam. However, they may not be a suitable option for every senior homeowner. Homeowners need to consider their financial situation and needs. It is smart to shop around and compare lender deals to ensure you get the best offer.

Question 3

Can I end up in foreclosure with a reverse mortgage?

Accepted Answer

Yes, you can end up in foreclosure with a reverse mortgage if you fail to pay your obligations to the lender. Other possible reasons for foreclosure are failure to maintain property taxes, home insurance premiums or homeowners’ association fees.

Question 4

Can I get a fixed interest rate on a reverse mortgage?

Accepted Answer

Yes, borrowers can get a fixed rate. However, you will have to choose a lump-sum distribution of proceeds.

Understanding How Reverse Mortgages Work

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