Minnesota AG, lawmakers are targeting reverse mortgages.

Minnesota Attorney General Lori Swanson and DFL lawmakers are introducing legislation they say will protect senior citizens from aggressive lenders pushing reverse mortgages on their homes.

Reverse mortgages are certainly something that should not be considered lightly.  Pam MacKenzie used to be for them but now questions them.  She points out some of the pitfalls.

A  reverse mortgage is available to senior citizens,  62 years old or older, and the bank lends the senior money against the equity in their home. The loan doesn’t have to be repaid until the seniors move out. If they die before moving out, the heirs pay off the mortgage out of the estate.

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My advice is to research your options very carefully before you take out a reverse mortgage. It’s okay to spend your heirs’ inheritance, but it’s not okay to waste your equity and net worth on frivolous spending. If people in your family tend to live a long time, don’t start borrowing money on a reverse mortgage when you hit 62. Your equity will be long gone when you hit your 80s and 90s and need that equity to pay for long-term care.

Her wise advice is to consult someone who understands money and have that person review your options with you before you sign on the dotted line.  Since some seniors have lost their homes through foreclosure on reverse mortgages, it is not something to enter into without a great deal of thought.

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Technorati Tags: Foreclosure, Personal Finance, Reverse mortgage