Home Equity Conversion Mortgages Look like Passive Income but Place Everything at Risk
What if you could turn your lifetime of mortgage payments into an endless stream of passive income? That’s what reverse mortgages seem to promise, but is it too good to be true? To answer that, let’s look at what the Fonz, District Attorney Arthur Branch (Law and Order), and Magnum PI all have in common: they have all appeared in commercials advertising reverse mortgages. Reverse mortgages, known formally as Home Equity Conversion Mortgages or HECMs, seem to promise a lifelong supply of monthly passive income, and some people may even think reverse mortgages offer a possibility to retire early.
However, they also carry so many risks and such high risks, most homeowners should avoid them. After all, when lenders focus on trust issues in their advertising, as they do by hiring actors familiar to the Boomer crowd (Henry Winkler, Fred Thompson, and Tom Selleck), it’s because they have trust issues with their customers.
Let’s dig deeper to see if they would work for you.
The post Reverse Mortgages Are Risky in Retirement originally appeared at 50PlusOnFIRE.