There are very few situations IMO where a reverse mortgage makes good sense. They are quite expensive with fees and you need to decide whether you want the money up front, take it periodically or a line of credit. When you take a line and then use it, the finance charges are astronomical. I did help one person get one, but she is over 70, no family and still had a small mortgage, which was eating into her retirement. She got got great relief from not having to make the monthly mortgage payment and since she has no family to leave the house to, she did not care who gets it. She is now more comfortable paying the insurance and taxes and has that line of credit should an emergency arise,.
Origination fee is max $6,000 and usually only charged on free & clear (or close to) properties who only fund closing costs at funding. That's because the originator gets paid on the amount funded at closing. 2-3 points on $15,000 doesn't cut it (less than $500). If the loan funds a lot then I waive the origination fee. Yes there is mortgage insurance BUT if you get upside down you nor your heirs are responsible for the difference.
With reference to ASTRONOMICAL finance charges please explain. It's a simple interest FHA insured loan with current rates in the 3.5% range. Add MI of 1.25% and you're still under 5%. How is that Astronomical? Let's not forget the unused line of credit s not charged any interest and actually grows at the same rate. A $100,000 line of credit grows to $105,000 at the end of a year.
True story on my first reverse deal. Lady in her 80's. House appraised for $250K. She only wanted $30k for repairs. I got her that plus an additional $130k in a line of credit. Every month she came in with her statement pissed off. I finally got her to understand she was NOT paying interest on her line of credit and she calmed down.
Then she wrecked her car and needed $20K for another.
Then she needed $15k for dental work and now I'm her HERO.
Then the market crashed in '07 and the value of her house dropped to $125,000. I explained to her nobody is promised tomorrow and advised her to pull the entire $160k out and put it in saving for her son. At the time she owed around $80k. I explained if she passed he would have one year to sell her NOW $125K house and net maybe $30. Take it all out and he gets $80K and gets to live there for another year before handing the keys over with no obligation.
She took my advice and died two months later.