Whenever the subject of reverse mortgages come up, invariably one of the objections that are cited is the perceived high cost of originating a reverse mortgage. Virtually every news media article about reverse mortgages cites the high cost and how it eats away at equity. That is why so many advisors recommend they only be used as a “loan of last resort” when there is no other option.
The opposite is actually true. When all costs are considered, reverse mortgages became the loan of first resort. The fact is that they actually cost considerably less when used as a source of income as compared to a portfolio or continuing to make payments from a portfolio once past the age of 62. Let’s investigate the concerns that both consumers and advisors have about the actual fees and closing costs that are the subject of concern.