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Avoiding Costly Mistakes
Some Words of Advice:
- Obtain independent legal and other financial advice prior to signing loan documents. Discuss the loan with trusted family members;
- Know that reverse mortgage loans cannot have prepayment penalties or restrictions. Loans must be able to be prepaid in full or in part at any time without penalty;
- Understand your obligations under the loan, i.e., to pay taxes, insurance, and maintain the property in a satisfactory condition. Failure to fulfill these obligations may constitute a default and possibly lead to foreclosure action;
- Understand that over time the loan balance may increase and impact the accumulated equity in your property, leaving little or no reserve for potential unexpected expense such as health care and home repair.
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