Victoria Duke, a law professor at Indiana Tech and expert in reverse mortgages, offers tips for preventing what happened to the Simpsons:
- The reverse mortgage financial option, available to Americans 62 years of age and older, can be a good way for seniors to create a cash flow, but there are drawbacks.
- To make sure seniors understand what they're signing, there are special requirements for those considering reverse mortgage. Duke said, if a person decides to waive interest on a real estate, they must be in counseling.
- Pro: The loan doesn't have to be repaid until after a person has either passed away, the home is sold, or they move away from the house for 12 consecutive months.
- Con: When Rebecca Simpson's name was removed from the deed, she no longer got the protection that included the "until death" clause. Duke said if she had a client come to her where the wife is younger than the man, she wouldn't recommend them signing away their interest.
- A broker could make a larger commission by putting together a mortgage with just one person's name on it. They realize that, when the one person dies, the property goes back to the bank.
- Duke said seniors on a fixed income are advised against spending their money on insurance products and annuities because those are risky investments.
Courtesy: Nima Shaffe, KCTV