What is going on with reverse mortgages?
I did a quick google and didn’t see anything.
It’s one of the Constitutional Amendments that’s on the Texas ballot in November. Never been permitted by Texas because we wanted to protect this often one source of security remaining - a roof over your head when you’re older. Really being pushed by realtors, bankers and start-up lending companies. Underwritten by HUD and FHA - government programs which which are in deep trouble already. Might want to google Senate Bill on Reverse Mortgages. Most articles written are by realtors or loan companies, certainly ones that have a lot to gain.
Borrowers don’t have to make payments but interest is added on to the loan amount. As I understand it, interest rate is not fixed. Then there is the matter of escrow for insurance and taxes, all of which are going up. Then the issue of a surviving spouse who would have to pay off any amounts due in order to remain in the house or have the property repossessed.
Traditional loans are like a balloon full of air that loses some air and gets smaller each time a payment is made. A reverse mortgage is like an empty balloon that grows larger as time passes. Reverse mortgages sell property slowly, one month at a time.
Many people who get these kinds of mortgages are already in dire financial straits. Selling and buying something smaller or even selling and using the money to pay rent might be a better option.
Older people often don’t have the resources to do the due diligence or seek sound advice before they take the plunge so it’s very much a buyer beware issue. Might work for some - just all depends. I just see big red flags when the HUD, FHA, realtors and lending companies all support the same program.