Reverse Mortgage

Page 3

If you are considering a reverse mortgage, be aware that:

1) Lenders generally charge origination fees and other closing costs. Lenders may also charge servicing fees during the term of the mortgage. The lender generally sets these fees and costs.

2) The amount you owe on a reverse mortgage generally grows over time. Interest is charged on the outstanding balance and added to the amount you owe each month. That means your total debt increases over time as loan funds are advanced to you and interest accrues on the loan.

3) A Reverse Mortgage may have fixed or variable rates. Most have variable rates that are tied to a financial index and will likely change according to market conditions.

4) Because you retain title to your home, you remain responsible for property taxes, insurance, utilities, fuel, maintenance, and other expenses. So, for example, if you don't pay property taxes or maintain homeowner's insurance, you risk the loan becoming due and payable.

5) Interest on reverse mortgages is not deductible on income tax returns until the loan is paid off in part or whole.

6) And Remember: A Reverse Mortgage can use up all or some of the equity in your home, leaving fewer assets for you and your heirs. A nonrecourse clause, found in most reverse mortgages, prevents either you or your estate from owing more than the value of your home when the loan is repaid.

No matter why you decide to take a reverse mortgage, you generally have at least three business days after signing the loan documents to cancel it for any reason without penalty. Remember that you must cancel in writing. The lender must return any money you have paid so far for the financing.

Page 1 Reverse Mortgage
Page 2 Three Basic Types of Reverse Mortgages

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