In a recent Post, I discussed Reverse Mortgages. Surely you’ve seen the ads on TV–with Robert Wagner, Fred Thompson or Henry Winkler–where they play-up the fact that they are “Government-Guaranteed” (whatever that means) and that there are not any monthly payments. They offer to send you a DVD that will “answer all of your questions”; however, they fail to highlight your responsibilities and the fact that they can be Foreclosed upon. That really can happen!
Their are two articles that I am linking that provide what, I believe, is a much better summary of this “Market”. (And it is a “Market”.) Today’s Miami Herald had the following column, by Michelle Singletary, Study Raises Red Flags on Reverse Mortgages, http://www.miamiherald.com/2012/07/06/2885111/study-raises-red-flags-on-reverse.html. An earlier notice from the Associated Press, Gov’t Watchdog: Reverse Mortgages Confuse Elderly, referring to a study by the Consumer Financial Protection Bureau, is linked: http://www.miamiherald.com/2012/06/28/2871852/govt-watchdog-reverse-mortgages.html.
As with any Financial Product, they might be quit suitable for some people; but, perhaps not for everyone. Someone pays for the advertising, not just on TV, but magazine ads, as well. Generally, they are SOLD, meaning that someone earns a commission–based on what they sell (their “Production”).
Especially for Senior Citizens, I generally suggest that they include a family member or friend–hopefully someone who understands finance–in any such meetings. Consult with your Accountant or Financial Advisor. AS ALWAYS, IF IT SOUNDS TO GOOD TO BE TRUE (AS ROBERT WAGNER SUGGESTS), IT GENERALLY IS.