The Downsides of a Reverse Mortgage

To be eligible for a reverse mortgage, generally you must:

• Be 62 years of age or older.

• Either completely own your home or meet applicable equity requirements.

• Live in the home.

• Be able to pay property taxes and other expenses associated with the property, such as homeowners’ insurance, maintenance and repairs, and any homeowners' association fees.

Maximum loan amounts range (depending on the lender) from 50% to 75% of the home's fair market value.

The general rule is that the older the homeowner and the more valuable the home, the more money will be available. All reverse mortgages have nonrecourse clauses, meaning the debt cannot exceed the home's value.

Maximum loan amount limits are based on the value of the home, the borrower's age and life expectancy, the loan's interest rate, and whatever the lender's policies are. For example, a homeowner taking out a reverse mortgage through the Federal Housing Administration would be subject to a maximum loan amount—even if the home's appraised value is more.

If you plan to move a few years down the road or there is a possibility you will have to move due to illness or any other unforeseen event, then a reverse mortgage probably doesn't make sense.

Additionally, suppose you already have a substantial mortgage on your home. In that case, the reverse mortgage is probably not for you since you must pay it off before becoming eligible.

Several additional downsides of reverse mortgages include: the two-hour version.”

• Incurring a large amount of interest debt. Reverse mortgages (fixed-rate or adjustable-rate) are rising-debt loans in that the interest is added to the monthly loan balance. Because it is not paid currently, the total interest you owe increases greatly over time as the interest compounds.

• Fewer assets for heirs. If you want to pass your home to your children or other heirs, the reverse mortgage is not a good choice because the lender could get most of the equity when the home is sold, leaving fewer assets for your heirs.

• Higher costs up front. The high up-front costs of reverse mortgages may make them less attractive to some people. All three types of plans charge an origination fee, interest rate, closing costs, and servicing fees. Insured plans also charge insurance premiums.

• Adjustable vs. fixed interest rates. With many reverse mortgage plans, interest rates are adjustable annually or monthly and tied to a financial index, sometimes with limits on how far the rate can go up or down. Reverse mortgages with interest rates that adjust monthly have no limit. Remember that the higher the rate, the faster your equity is used.

Reverse mortgages are a complex financial tool that may be the answer for some house-rich and cash-poor retirees planning to age in place, but they are not for everyone. This column is for general information only and should not be considered as specific advice. Consider talking with an experienced professional to determine whether a reverse mortgage makes sense for you.

Prior to CTM’s early kiosks, these brochures were typically left with the front desk of hotels, according to Jiranek. Visitors may not know that they were available, and delivering the brochures along with gauging how many were needed was not a task even tourist-dependent businesses typically hired a dedicated employee to handle.

CTM kiosks are generally an amenity free for a location to host, dispensing valuable information at no cost to travelers. CTM’s customers are the companies that want their brochures and pamphlets distributed. The customers are responsible for printing the materials, but CTM will warehouse and distribute the materials as well as provide insights into how many brochures are being taken during replenishment.

Mark Layton is the director of regional operations for CTM and works out of the warehouse associated with the company’s Stamford corporate headquarters. He has been with the company for 12 years and his focus is on kiosks throughout Eastern Connecticut.