It has been said that the cost of Reverse Mortgages can be too high, even here in Kansas City, Missouri.

Really?  The costs are high? Compared to what?

Remember our first installment was a sixty-two year old with a $250,000 house would qualify for an $118,033 Line of Credit (LOC). Their closing costs would be about $10,180 so their available LOC is $107,853.

She needed $100,000 for something very important. She has many other assets she could access. (I'm not a Tax advisor always consult a tax advisor). If she pulled a net $100,000 out of a Mutual Fund and she had held the mutual fund more than 12 months it would likely be taxed at the long term capital gains rate of 15% if we assumed the state would want 5% she would have to pull out approximately $125,000 to cover the Federal & State Taxes. That's $14,820 more than the closing costs on the Reverse Mortgage.

More importantly, they will lose the earning power on that $125,000. Now in a mutual fund the 20 year average return is more likely to be closer to 10% so after the fees and all let's say 8.5%, so in 20 years it's worth $680,155. Where the amount owed on the Reverse Mortgage with the 20 year average rate of 6.54% and a $25 monthly fee would be $418,405. 

Which one cost her more? 

In this case the Reverse Mortgage SAVED her an estimated $261,750.  There would be taxes due on that money. While true, the estate could possibly use the $296,142.80 in interest/fees to help offset the taxes when the estate is sold.

So are the costs of Reverse Mortgages in Kansas City, Missouri too high?

The easy answer is; it depends on your situation and what you want to do.

Don't believe the blanket statements the media puts out there.  You should seek out a true professional that can accurately answer your questions.

Consult with a Reverse Mortgage professional that will share with you all this information. For more information go to www.stayinyourhomekc.com or call Kurt Jackson at 816-415-1737.