![]() ![]() ![]() So closing costs can be as high as $12,000 on a $150,000 loan. Origination fees are capped at $6,000 on a HECM loan. Reverse money mortgages are expensive up front: The hefty government insurance fee, 2 percent of the value of your home (as opposed to the amount of the loan), is the bulk of the cost.Do you want to spend all of the home’s equity, or leave some equity for your kids? As you stay in your home, your debt can grow to equal the value of the house and your heirs won’t receive a thing.How will you use the money? It’s pretty much always a bad idea to use a reverse mortgage to pay for a vacation or a risky investment. ![]() What payout is best for you? Unless you need the money right away, it’s best to opt for installment payments since the money you take starts accumulating interest immediately.How long do you expect to stay in your house? The right answer is “at least seven years.” Reverse money mortgages become less expensive over time the longer you live, the cheaper they are.If you need a large amount, you might consider moving to a less expensive property instead. If you need only a small amount for a short time, try taking a home equity line of credit. Is a reverse mortgage your best option? If you have the income and credit rating to qualify for a traditional mortgage, it may be a better option.Reverse money mortgages typically have a “nonrecourse” clause, which means you and your estate will never owe more than what your home is worth.Lenders cannot look to other assets of the borrower or the heirs to repay the loan. They’re sensitive to the market and don’t want to lose money in a rushed sale. Most lenders in the industry automatically allow 90 to 180 days if the heirs opt to sell the home.Any remaining equity in your home belongs to you or your heirs. The loan is repaid in full, including all interest and other charges, when the last living borrower dies, sells the home or moves away.Reverse mortgages are also available on 2- to 4-unit properties, condos, co-ops, planned unit developments and prefab homes. ![]()
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