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Keep an open line of communication with parents about their finances. Q. My parents are in their seventies and recently refinanced their home using an online lender. They thought the loan would pay off all their debt, but it did not. Now their house payment has almost doubled, and they still have debt to pay. Why would a lender let people in their seventies refinance their home? What can they do now?
A. I understand your concern for your parents and their financial well-being. A recent study from Texas Tech University confirms that aging Americans are at a higher risk than younger consumers when it comes to their finances. Researchers found an alarming decline in financial awareness among Americans of retirement age. What’s more, the study showed that while the ability to manage money decreases for retirees, confidence in their ability stays the same. A decrease in financial ability means seniors are more vulnerable and at a greater risk for fraud and abuse.
While the Internet gives us access to more services than ever before, when it comes to significant financial decisions, I maintain that people, of any age, should choose to work with a local lender. Prospective borrowers need to take the time to review a major decision and ask the right questions. And if there is an issue, they need to be able to reach a person on the phone or speak to someone in person.
At this point, I would encourage your parents to visit with counselor at a HUD-approved housing counseling agency. A trained housing counselor can review their entire situation and provide options for them.
Not liking the terms your parents received isn’t enough to take legal action. However, if your parents were given incorrect information, then you should encourage them to file a complaint with the Consumer Financial Protection Bureau at www.consumerfinance.gov. On the other hand, if your parents are satisfied with their decision to refinance—but you aren’t—you have little recourse.
As for your question about a lender allowing your parents to refinance, lenders cannot discriminate based on age. Therefore, your parents’ request to refinance has to be met with the same opportunity as a younger couple.
I encourage to you continue to communicate with your parents about their finances. As parents age, they need someone who is looking out for their best interest.
Bonnie Spain is the executive director of the American Center for Credit Education and Consumer Credit Counseling Service of the Black Hills. For more information, email acce@acce-online.com.
The material in this transmission is provided for personal, non-commercial, educational, and informational purposes only. ACCE makes no representations or warranties with respect to the accuracy or completeness of the contents of this transmission and assumes no responsibility for errors, inaccuracies, omissions, or any inconsistency herein. You should consult a professional where appropriate.
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