Maximum payments vary, depending on the loan program, the borrower's age, the home's value, and market interest rates. Younger borrowers and more modest homes typically get smaller payments. Those payments, plus interest currently averaging around 6 percent, plus points, plus insurance charges, will be repaid by the borrower's heirs when they sell the home after she dies. But most seniors are taking a pass. Last year, just 8,000 of the millions of older Americans who own their homes took out reverse mortgages, according to Harris Turkel, head of Horsham-based GMAC Capital's reverse mortgage unit, the nation's largest.
Reverse mortgages allow older homeowners to live better and more independently.
That is despite 10 years of efforts by the Federal Housing Administration, which helps insure many reverse-mortgages. In part, reverse mortgage advocates blame the complex nature of the loans. In the process, Fannie Mae imposed guidelines that lenders say has had the effect of reducing fees - making the loans more attractive to the consumers but less profitable for lenders. We're in it because it's good for the seniors. It's still evolving.