The Commonwealth of Massachusetts has launched a new website to help consumers make wise choices about Reverse Mortgages. The site explains that a "reverse mortgage loan is a special type of mortgage loan for seniors (generally age 62 and older) that pays a homeowner loan proceeds drawn from accumulated home equity. Unlike a traditional home equity loan or second mortgage loan, no repayment is required until the borrower(s) no longer use their home as their principal residence."
The site outlines the pros and cons of obtaining a reverse mortgage, explains the fees and ramifications of obtaining a reverse mortgage and has a list of the approved reverse mortgage lenders in Massachusetts.
Especially important is the section on red flags to watch out for:
- Sales tactics involving the required or suggested purchase of annuities, other investments, long term care insurance or other types of insurance policies with proceeds from the loan.
- Sales tactics involving contractors looking for proceeds to pay for home repairs.
- Being advised to transfer title to the property out of you or your spouse's name to qualify for the loan. Understand the legal consequences of title transfers.
- Being advised to have loan proceeds payable to third parties, and not you as the borrower(s).
- Estate planning services that offer to refer you to a lender for a fee or percentage of the loan. You can obtain information on lenders from the Division of Banks and HUD at no cost.