Many big banks and mortgage companies are pushing reverse mortgages right now. Countrywide and others are offering classes to loan officers on how to sell (what to say, and what to avoid saying) this product to seniors. In the first article of its kind that I've read, someone articulated what I've been telling my clients for years. This is some of the most expensive money you will ever borrow.
The article is Reverse Mortgages Promise Seniors Cash, Advisers Urge Caution, by Bloomberg's Alexis Leondis.
Because the equity is the homeowner's, there is no income qualification. That's attractive to seniors on fixed and limited incomes. But the fees can equal six percent of the value of the home, and the interest rate on the dollars that are loaned to the homeowner each month can top 13% as interest rates rise.
FHA is getting involved with these mortgages, but that's not a done deal. So worry about those you love; this is a very expensive way to borrow money.
I'm Mike in Tucson, your preferred Tucson, Arizona mortgage lender.
Think of me as your local expert.
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