Reverse Mortgages Need Closer Look

This article from 'The AGE' in australia discusses the need to be cautious when borrowing a reverse mortgage. One problem is that people don't actually read the full mortgage contracts.

LET'S be honest. Most people, when borrowing money to buy their home, don't bother to read the full mortgage contract. They check the essential terms like the amount being borrowed and the interest rate and sign on the dotted line.

One of the things that the Australian Consumers Association is concerned about the traps that are hidden in reverse mortgage documentation.

But the Australian Consumers Association is concerned that the same may not be true for the fast-growing number of reverse mortgages. The ACA recently reviewed 19 reverse mortgages and found a number of traps in the documents. It found many contracts were confusing and hard to interpret and contained wide-ranging default clauses that could result in higher interest rates being charged, a borrower's rights under the contract being limited, or even the enforced sale of the house.

They stress the need to take a close look at any documentation before signing for a reverse mortgage.