Released: May 22, 2007

Reverse mortgages: Some drawbacks exist

Source: Sandra Block, USA Today

If you’re still watching your favorite nature programs on a 25-year-old RCA console, perhaps you’ve considered buying one of those snazzy high-definition TVs that let you count the hairs on a hyena’s back. You’ve heard that prices on high-def sets have tumbled. But should you buy now, or put up with blurry buffalos a bit longer, in hopes that prices will fall even more?

Homeowners who are considering a reverse mortgage face a similar dilemma. In recent months, lenders have slashed closing costs and fees and added new features for reverse mortgages — a trend that’s expected to continue as more lenders battle for business.

A reverse mortgage is a loan against home equity that doesn’t have to be repaid until you move, sell your home or die. You can receive a lump sum, a line of credit, monthly payments or a combination. To qualify, you must be 62 or older. (If the home is owned jointly, both owners must be at least 62.) The amount you can borrow is based on your home’s value, current interest rates and your age.

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