Reverse Mortgages Are Popular with Some Seniors

Reverse mortgages are increasingly popular among older home owners, who often have much of their net worth tied up in their homes.

Brad Stroh, co-founder and co-CEO of Bills.com offers this advice for anyone contemplating a reverse mortgage:

•How much equity is there in the property? If the home still is mortgaged, the home owner will have to use proceeds from the reverse mortgage to pay off the loan.

•Know your borrowing eligibility. The Federal Housing Authority regulates how much home owners can borrow with a reverse mortgage. The amount varies with the home’s value and the borrower’s age. Get a ballpark figure with a calculator such as AARP's.

•Determine the costs. Closing costs on reverse mortgages are more expensive than regular mortgages. The fees are subtracted from the proceeds.

•The U.S. Department of Housing and Urban Development provides information free of charge to potential reverse mortgage applicants who need help finding a lender or understanding if they qualify. “Counselors” who offer this service for a fee may be scammers.

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