(Bloomberg Business) — Seniors watch a third more TV than other adults, and every time they turn on the set there’s a good chance they’ll see an ad for reverse mortgages.
As healthy-looking retirees ride bikes or play golf, an older actor will explain that reverse mortgages can be a great way for retired homeowners to get some extra spending money. And it’s true: Reverse mortgages can be a valuable tool for retirees.
They’re also very complicated, with risks that seniors may not expect. According to a new study by the Consumer Financial Protection Bureau, all those ads are adding to the confusion.
A reverse mortgage is a loan taken against the equity in your home. Unlike a home equity line of credit, which can be yanked away by the bank, a reverse mortgage doesn’t need to be paid back until the homeowner dies or moves out.
As Baby Boomers retire, they’re likely to need some extra financial help. About half of all Americans 55 and older have no investments at all, the Government Accountability Office said in a report issued this week. At 55 to 64, the median American household with savings has only about $104,000, enough to buy an inflation-protected annuity of just $310 a month.