Reverse Mortgage

The Office of the Comptroller of the Currency (OCC) issued a consumer advisory to help consumers better understand reverse mortgages, which are generally available to consumers 62 or older and used to supplement retirement income or other financial needs. The information discusses basic facts about reverse mortgages, which are complex, home-secured loans.

Under a reverse mortgage, a consumer receives payments from the lender – either over time or all at once – based on the value of their home at the time of the loan. As the consumer receives payments and interest and fees accrue, those amounts are added to the loan balance. The advisory reviews those costs and benefits.

In addition, the consumer advisory provides basic “rules of thumb” for consumers considering a reverse mortgage, advising them to 1) investigate other alternatives in addition to reverse mortgages, 2) remember that reverse mortgages generally make more sense for borrowers planning to live in the home a long time, and 3) be wary of anyone trying to sell other products along with a reverse mortgage.

The advisory urges consumers to consult a qualified, independent housing counselor before entering into a reverse mortgage, and explains how consumers may obtain additional and unbiased information about reverse mortgages.

“Reverse Mortgages: Are They for You?” can be downloaded (PDF format) by clicking here.