Are Reverse Mortgages Legal in New York State?
Have you seen the commercials on TV that encourage older Americans to take out a reverse mortgage on their home if they need extra money in their retirement? I must be very jaded (or just from New York) that I see a commercial like that and even with Tom Selleck trying to assure me that all is ok, I think that people are somehow getting scammed.
What is a reverse mortgage? Why would people get one and are they actually legal to sign into contract in New York State? If I do this will I get to meet Tom Selleck? Ok, I know I won't get to meet Tom Selleck, but it wouldn't hurt to ask.
What is a Reverse Mortgage?
The easiest way to understand a reverse mortgage is that it is the opposite of a regular mortgage where you make payments to a lender and eventually, you will own the home. In a reverse mortgage, the lender makes payments to you, with the intention of getting an interest or ownership in your home. You get to live there and when you (or your estate) go to sell the house, you can sell the house, pay back the reverse mortgage lender or you can sell the house to them for what the house was valued at, at the time of the loan, less what they paid you.
Confusing? Imagine being someone in their more senior years trying to figure all that out. So it is legal?
Is a reverse mortgage legal in New York State or a scam?
According to the New York State Department of Financial Services, reverse mortgages are legal in New York State, but there are very few banks or lenders that will partake in them.
If you are thinking about getting one, as a way to access money each month, make sure to take someone with you and make sure that you are not being scammed. Plus, do not sign anything, I will repeat that, do not sign anything without a lawyer looking at the paperwork first.