National Council on Aging Releases 8 Myths about Reverse Mortgages

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Jul 26, 2012, 01:00 ET

WASHINGTON, July 26, 2012 /PRNewswire-USNewswire/ -- Over the past 20 years, reverse mortgages have become an increasingly popular financial tool among older homeowners planning their retirement. But they have also been controversial, and there are many misconceptions about if and when they are the right for seniors.

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The National Council on Aging (NCOA), a federally-approved Reverse Mortgage Counseling Intermediary, has released 8 Myths about Reverse Mortgages to help older adults keep up with the changing facts about this special type of home loan.

Also known as Home Equity Conversion Mortgages (HECMs), reverse mortgages allow homeowners aged 62 and older to convert a portion of their home equity into cash. Unlike a traditional home equity loan or second mortgage, borrowers do not have to repay the loan until they either no longer live in the home as their principal residence or they fail to meet the obligations of the mortgage.

"Millions of older Americans who have not saved enough for retirement are looking for new ways to cope with today's financial realities," said Barbara Stucki, NCOA vice president for Home Equity Initiatives. "Taking out a reverse mortgage is a big decision. Borrowers must carefully consider their options on how to use this valuable financial asset. We want seniors to make smart decisions and know about resources that can help them stay independent longer."

The 8 Myths about Reverse Mortgages include:

Myth #1: A reverse mortgage works the same as any other type of home loan.
Myth #2: Most reverse mortgage borrowers use their loan funds for vacations and other fun things.
Myth #3: Reverse mortgages are too expensive.
Myth #4: Reverse mortgages should only be used as a last resort.
Myth #5: Most people who take out a reverse mortgage are elderly widows.
Myth #6: A fixed rate reverse mortgage is always a good idea.
Myth #7: Reverse mortgage counseling is a waste of time.
Myth #8: Most reverse mortgage borrowers who end up facing foreclosure were scammed.

See the full list at www.ncoa.org/RMMyths.

NCOA offers several tools to help older homeowners make the most of their home equity, so they can stay economically secure. These include:

Home Equity Advisor: Developed with a grant from the FINRA Investor Education Foundation, this new website offers a free Quick Check for older homeowners who want to explore how they can use their home equity to meet their retirement goals and avoid scams.
Reverse Mortgage Counseling Services Network: Our trained counselors can help older adults understand the costs and features of different types of reverse mortgage and evaluate the pros and cons for their situation. They also discuss other options, including public and private benefits, which can help seniors stay independent longer. The U.S. Department of Housing & Urban Development (HUD) has approved NCOA as a reverse mortgage counseling intermediary.
Use Your Home to Stay at Home™: This free brochure explains reverse mortgages for older adults and their families, and is a required handout at all HUD reverse mortgage counseling sessions.

For more information about reverse mortgages and home equity options for older adults, please visit NCOA at ncoa.org/HomeEquity.

About NCOA
The National Council on Aging is a nonprofit service and advocacy organization headquartered in Washington, DC. NCOA is a national voice for millions of older adults—especially those who are vulnerable and disadvantaged—and the community organizations that serve them. It brings together nonprofit organizations, businesses, and government to develop creative solutions that improve the lives of all older adults. NCOA works with thousands of organizations across the country to help seniors find jobs and benefits, improve their health, live independently, and remain active in their communities. For more information, please visit: www.ncoa.org |www.facebook.com/NCOAging | www.twitter.com/NCOAging

SOURCE National Council on Aging