A Reverse Mortgage is Too Expensive!

FACT: Is it? Let’s take a look!

Let’s compare a traditional 30-year fixed mortgage loan to a Reverse Mortgage.

Both are residential mortgage loans which require the same lender, escrow, title, and other third-party “one-time” fees to close the loan. They both require property taxes, home insurance, and HOA fees to be paid current.

If the Reverse Mortgage loan is the FHA HECM (Home Equity Conversion Mortgage)—most often chosen—then it will easily compare to the traditional FHA forward home loan.

In any FHA loan, there must be the government-required “Upfront Funding Fee” and an annual Mortgage Insurance Premium.

● In the Reverse Mortgage, this insurance protects the homeowner, the estate, and the heirs from adverse financial recourse of deficiency.

● In the FHA forward loan, it provides protection to the lender from borrower default.

The FHA loan allows borrowers with lower credit scores, minimal down payment, and riskier financial borrower profiles to buy a home.

In both cases, the costs are similar:

“Expensive,” compared to what?

● Are you removing a required monthly mortgage payment by obtaining a Reverse Mortgage?

● Are you saving on income taxes by using one?

● Are you growing income tax-free cash value in the Line of Credit within the Reverse Mortgage?

● Are you pulling income or investment money out, income tax-free?

● Are you strategically using the Reverse Mortgage to mitigate sequence of return risk?

Perhaps, this Reverse Mortgage strategy is actually VERY COST efficient!

Disclaimer: The information provided is based upon education, solid knowledge, experience, and research; however, it should not be considered professional legal advice. Consult a legal professional with regard to your specific situation.