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Understanding reverse mortgages

A reverse mortgage is a loan that allows

A reverse mortgage is a loan that allows homeowners 62 and older to convert a portion of the equity in their homes into cash, as long as the home remains their primary residence. Credit: iStock

Television commercials, magazine ads and brochures from companies that sponsor reverse mortgages may make you believe these products are a no-lose choice for homeowners 62 and older. But you may not be getting all the facts.

The U.S. Consumer Financial Protection Bureau, commonly referred to as CFPB, looked over ads for reverse mortgages and found many contained "incomplete and inaccurate statements" that confused consumers. High on the list: After reading the ads, many homeowners thought a reverse mortgage is some sort of government benefit when it is in fact a private loan that has to be paid back.

The CFPB offers a free tip sheet (nwsdy.li/reversemtg) that explains reverse mortgages -- along with their potential downsides. If you already have a reverse mortgage and have a complaint about your loan or mortgage servicer, call the CFPB at 855-411-2372.

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