As we watch the current financial turmoil impact even the most diversified of portfolios, and threats of inflation in the coming years increase with every bailout – unlocking the cash in your home via a reverse mortgage is still one of the least attractive financial moves you can make.
The AARP says with so many other options available to seniors – a reverse mortgage should only be considered when all other options are unavailable – and for good reason.
Consider the following:
In most states – home owners can borrow up to $417,000. Let’s use that figure for our calculations.
Borrowers pay a loan origination fee of 2% on the amount of their loan up to $200,000, and an additional 1% for whatever they borrow above that amount – capped at $6,000.
You’d also have to pay 2% of the loan for the mortgage insurance premium – or $8,340 in our example.
There’s more.
Add in a onetime fee for 3rd party closing costs estimated at $2,200 for our example, and before you receive a dime – fees are already $16,630!
In addition, lenders charge a monthly service fee, called the service fee set-aside – usually $20-$35 monthly and a monthly interest charge of maybe .5% per month. These can add on thousands to the final cost of the loan.
Most fees are deducted from the amount you borrow so they significantly reduce the cash you receive.
In fact – 63% of seniors who shopped for a reverse mortgage – decided against it because they knew they had other, better options.
The primary goal of the Life Settlement Network is to help seniors find the value in an asset they may not have known had any value. Unwanted or unneeded life insurance can provide a terrific cash infusion and is a vastly superior option to a reverse mortgage in most cases.
