Law Office of Richard M. Russell
197 Palmer Avenue
Falmouth, Massachusetts 02540

This site does not provide legal advice. Please visit the Law Office of Richard M. Russell for information specific to your circumstances.

Reverse Mortgages

■ once a reverse mortgage is obtained, the property subject to the mortgage must remain the borrower’s principal residence (if not the principal residence, the mortgage must be paid): this provision could limit future planning opportunities

■ if the mortgage provides for a line of credit, the amount available under the line of credit increases with time: this appears to be a favorable feature

■ for so long as the property serves as the borrower’s principal residence, the borrower need not make any payments toward the mortgage (except for up front application costs)--the borrower must continue to pay taxes, insurance, etc.

■ up front application costs are substantial

■ some lenders may waive the origination fee

■ in any mortgage-loan transaction, interest is charged against borrowed money; in a reverse mortgage, the interest (and the original loan amount) need not be paid while the mortgaged property is the borrower’s principal residence; unpaid interest is added to the loan amount and itself is subject to interest; the failure to pay interest during the life of the loan results in a rather substantial increase in indebtedness beyond the amount originally borrowed

■ a reverse mortgage may be used for purchase of a house: those downsizing, for example, might be able to take advantage of this provision

■ reverse mortgage counseling is required and is valid only for 180 days; additional counseling will be required if a loan is sought after the 180 days

■ the transaction is subject to a three-day right of rescission