You have to be careful with what you're getting yourself into when it comes to reverse mortgages. Many retirees take out reverse mortgages to generate cash to live on without having to sell their home. While this type of product makes sense for some individuals, many find themselves paying excessive fees for an unnecessary product. To help consumers navigate the world of reverse mortgages the U.S. Department of the Treasury has issued the following guidelines:
1. Explore other loan products such as home equity lines of credit & cash out refinances first
2. Reverse mortgages are generally too costly if you plan to stay in your home for less than 10 years
3. Be cautious of agents that try to sell you other products, such as annuities, in addition to the reverse mortgage
4. Consult with a counselor from the U.S. Department of Housing and Urban Development before you commit to anything
5. If you do get a reverse mortgage, make sure the loan is insured under the Federal Housing Administration (FHA) so that if the lender can't or won't continue payments, the government will.
The complete guidelines on reverse mortgages can be viewed here
Erin