In effect, the cost of such financing is 63.36 percent. Most lenders do not offer reverse mortgages and one result is arguably less competition and choice than can be found with other loan formats. The government has tried to make reverse mortgage costs clearer but has been no match for clever lenders. In general, the longer the term being described the lower the rate. This clause says that in addition to high closing costs, in addition to high interest rates, the lender also gets a piece of the home's equity when it's sold.
Reverse mortgages raise harsh issues.
Yes, in many families it is important to provide children with an inheritance, but perhaps everyone would be better off if adult children provided a monthly stipend to aging parents rather than give much of their birthright to lenders. There may be instances where reverse mortgages, in limited circumstances and without equity participation, are worthy of consideration. But homeowners should not contemplate such financing on the basis of lender representations alone. Contact a fee-only financial planner, an attorney who specializes in elder law, or a CPA to evaluate reverse mortgage options. Speak with an attorney for details.