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Everything You Need to Know About Reverse Mortgages

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Myth #2: Most reverse mortgage borrowers use their loan funds for vacations and other fun things.

Truth: The truth is that most borrowers today use their loans for immediate needs, such as paying off their existing mortgage or other debts. About 33% of homeowners who consider these loans want to supplement their monthly income, so they can afford to continue living in their own home longer.

Myth #3: Reverse mortgages are too expensive.

Truth: Taking out any home loan can be costly because of origination fees, third-party closing charges (such as an appraisal, title search and recording costs), and servicing fees. You can pay for most of these costs as part of the reverse mortgage loan. Borrowers who select a traditional HECM Standard reverse mortgage also must pay a hefty upfront FHA mortgage insurance premium that can be as much as 2% of the value of their home. But this insurance guarantees that you will receive the expected loan payments. In addition, you (or your heirs) don’t have to repay more than the value of the home, even if the amount due is greater than the appraised value. The new SAVER HECM reverse mortgage is less expensive because it all but eliminates the upfront insurance fee. However, borrowers get a smaller loan amount with a HECM Saver than with a Standard loan. There are many factors to consider if you are thinking about using your home as a financial resource. You can take a free Quick Check to explore the cost and benefits of tapping home equity through a loan or by selling your house at Home Equity Advisor.

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Photo courtesy of the National Council on Aging.

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56 comments

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12:13AM PST on Feb 11, 2013

I have found this site - it is very useful in your research to learn more about the program - the best part about this company is that they actually compare multiple lenders - saved me a lot of time and money
visit site by search for reverse mortgage lenders direct

4:32PM PST on Jan 6, 2013

Thank you Colleen, for Sharing this!

12:07PM PDT on Sep 17, 2012

Thanks

3:13AM PDT on Sep 16, 2012

thanks

10:23PM PDT on Sep 15, 2012

Is this another scam on the elderly?
This is horribly disgusting, if it is.

9:10AM PDT on Sep 15, 2012

ty

7:02AM PDT on Sep 15, 2012

I always wondered what a reverse mortgage was. Thanks, not interested

3:44AM PDT on Sep 15, 2012

She didn't mention it to me and I was shocked to learn that a good friend with a great property took out a reverse mortgage. But when asked who her financial adviser is she proudly said "I am". Too late now. How sad.

9:34PM PDT on Sep 14, 2012

Thank you

10:43AM PDT on Sep 13, 2012

Thank you

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Colleen H. Colleen H. is an Online Campaigner with Care2 and a recent transplant to San Francisco from the East... more
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