By Connie Thompson
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While thousands of people are losing their homes to foreclosure, others are using their homes as a last resort, borrowing against the equity in their home - without making payments on the loan. Fewer people are getting reverse mortgages now because of the drop in home values, but many people who qualify (you must be at least 62) are sitting on a pile of equity.Lewis and Barbara Arnold have seen the glamorized marketing of reverse mortgages."If you see the commercials, the commercials are (about) houses that are probably $500,000 or $600,000 houses, the people are dressed really nice - they got their gray hair all slicked down and they got nice are all that," said Lewis Arnold.But the Arnolds are just looking to pay off more than $65,000 in medical bills."Hospital debt, doctor debt from a liver transplant, kidney transplant, I've had both knees done," Newis said.So, the Mason County couple is taking a reverse mortgage against the value of their home.Before you get a reverse mortgage, the government requires counseling by an approved agency like Consumer Counseling Northwest.But consumer advocates say many people don't understand the true costs.There are three options for interest charges - a fixed rate, a rate that adjusts ever month, or a rate that adjusts every year. Each option has a different effect on your bottom line.There are other costs - loan fees, monthly service fees, mortgage insurance and closing costs. You can take your money in a lump sum, get a line of credit or a combination of the two. Your choice will affect the how much interest you'll pay.Once their bills are paid, the Arnolds will get about $13,000. Then, they'll have to buy a car to replace their current car which has more than 300,000 miles. They'll still have to live on a very tight budget."But I'll be debt free," said Lewis. "I can go to bed at night and say, 'Thank God, I don't owe anybody anything.'"Again - you must be at least 62 and have equity in your home with no liens.One final word of caution - even with the required counseling seniors are still getting duped into reverse mortgages that are not in their best interest.So be sure to ask questions, check facts and figures and contact the American Association of Retired Persons for tips that can help. On the Web:http://www.aarp.org/money/revmort/
Watch the story
While thousands of people are losing their homes to foreclosure, others are using their homes as a last resort, borrowing against the equity in their home - without making payments on the loan. Fewer people are getting reverse mortgages now because of the drop in home values, but many people who qualify (you must be at least 62) are sitting on a pile of equity.Lewis and Barbara Arnold have seen the glamorized marketing of reverse mortgages."If you see the commercials, the commercials are (about) houses that are probably $500,000 or $600,000 houses, the people are dressed really nice - they got their gray hair all slicked down and they got nice are all that," said Lewis Arnold.But the Arnolds are just looking to pay off more than $65,000 in medical bills."Hospital debt, doctor debt from a liver transplant, kidney transplant, I've had both knees done," Newis said.So, the Mason County couple is taking a reverse mortgage against the value of their home.Before you get a reverse mortgage, the government requires counseling by an approved agency like Consumer Counseling Northwest.But consumer advocates say many people don't understand the true costs.There are three options for interest charges - a fixed rate, a rate that adjusts ever month, or a rate that adjusts every year. Each option has a different effect on your bottom line.There are other costs - loan fees, monthly service fees, mortgage insurance and closing costs. You can take your money in a lump sum, get a line of credit or a combination of the two. Your choice will affect the how much interest you'll pay.Once their bills are paid, the Arnolds will get about $13,000. Then, they'll have to buy a car to replace their current car which has more than 300,000 miles. They'll still have to live on a very tight budget."But I'll be debt free," said Lewis. "I can go to bed at night and say, 'Thank God, I don't owe anybody anything.'"Again - you must be at least 62 and have equity in your home with no liens.One final word of caution - even with the required counseling seniors are still getting duped into reverse mortgages that are not in their best interest.So be sure to ask questions, check facts and figures and contact the American Association of Retired Persons for tips that can help. On the Web:http://www.aarp.org/money/revmort/
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