DEAR SUN SPOTS: On May 2 there was a request for information about reverse mortgages. I would like to share my experience.

None of my children wanted my home after I passed on, so I felt that I could use the extra cash and went ahead with it.

As time went on, I realized that the finance charges were very high. I was paying more than $150 for $500 each month. Overall, I received $45,000 and now have a mortgage for $70,000.

I had planned on staying in my home until I passed on, but things changed. I went into a retirement home.

Once you leave your home for two months, you must put the property up for sale. During this time time, the finance charges do not stop. You will be charged until the home is sold and the loan is paid off.

Moreover, if I sell my home for what it is listed, I will have to pay back about $72,000 to $75,000. What with that and the Realtor’s commission, I will end up with about $8,000 to $10,000 instead of having $80,000.

Do not get a reverse mortgage if you do not need it! — No Name, No Town

ANSWER: Sun Spots is so sorry this happened to you. She was not intending to endorse reverse mortgages, because only rarely are they a good idea.

Readers also need to be wary of mortgage loans with balloons or low introductory interest rates, which got many homeowners into trouble when the housing market crashed.

Even if you carefully read your contract, it is easy to be deceived about the actual cost of any loan or investment. Hiring an attorney or independent investment adviser can be well worth their fees.

As finance has become an ever bigger part of the American economy, previously basic transactions have become increasingly complicated. About 9 percent of the U.S. gross domestic product is now derived from financial services. It was about 2 percent in the 1940s.

The “financialization” of the economy (making money off money) rather than making things is one of the many transitions we’ve seen in the U.S. and some other developed countries that some experts partially blame for the financial crisis and lagging employment.

Hidden fees are increasingly eating into many peoples’ investments. “Frontline” on PBS has run several programs about these shenanigans. Sun Spots highly recommends “The Retirement Gamble” about mutual funds (often a big part of many 401ks) and their often exorbitant fees. It may be rebroadcast this summer, so watch for it. Or you can watch it online at http://video.pbs.org/video/2365000843/

Managing money well is extremely time consuming. Some politicians have proposed privatizing Social Security, saying people should be allowed to manage their retirement incomes themselves rather than turning a percentage of their earnings over to the government. Similar plans have been suggested for Medicare.

But how many average workers, busy with job and family, have the discipline to save and then the time to figure out how to wisely invest cash so that it will grow into adequate retirement income instead of receiving Social Security? Sun Spots would rather have time to play with her goats!

DEAR SUN SPOTS: Thank you for posting our letter concerning the Norway High School alumni banquet in the May 27 edition. We noticed a typo in the email address which people are invited to respond to. The correct address is [email protected], not “fiarpoint” as appears in the newspaper. Thanks again. — June Tracy

ANSWER: Sun Spots fixed the error on the website. Hopefully readers will realize the mistake if they type it themselves rather than trusting Sun Spots’ wayward fingers. No introduced typos is one of the many blessings of emailing Sun Spots!

This column is for you, our readers. It is for your questions and comments. There are only two rules: You must write to the column and sign your name (we won’t use it if you ask us not to). Please include your phone number. Letters will not be returned or answered by mail, and telephone calls will not be accepted. Your letters will appear as quickly as space allows. Address them to Sun Spots, P.O. Box 4400, Lewiston, ME 04243-4400. Inquiries can also be emailed to [email protected]


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