Topic: How To Invest

Q: Pat: I’ve noticed a lot of TV ads for reverse mortgages lately. What’s your view on these? Thanks for all your advice over the last few years!

Article Excerpt

A: If you’re looking at a reverse mortgage for your own home, I see them as appealing only in highly specialized situations. You’d want to use a reverse mortgage only if you feel that selling your home is out of the question, and if you’ve exhausted all sources of income that do not involve heavy costs, such as a big capital-gains tax bill. Before taking out a reverse mortgage, make sure you consider all other housing or financial options open to you. If none of the alternatives are appealing, you still need to consider the costs of the reverse mortgage. What are the initial costs, such as the application fees and the house appraisal? What are the on-going costs and the interest rate? What are the exit costs; i.e., is there a penalty for getting out of the plan early, and are there additional legal fees or real estate fees? You’ll need to seek out and pay for independent legal advice…