I was so happy to read the headline, “ Top Ten Things to Know About Reverse Mortgages ” (Top Line, JofA , Jun.06, page 17), but I was greatly disappointed after reading the article. It is nothing but a rehash from the HUD Web site.
As CPAs, the most important thing we need to advise clients with respect to reverse mortgages is cost. Closing costs can easily exceed $20,000. In addition to normal closing costs, the loan origination fee alone is 2%, and there is also a one-time 2% mortgage insurance premium plus 0.5% annual mortgage insurance. There is also a loan service fee ranging from $30 to $35 a month.
I think the JofA owes its reader a follow-up article pointing out the pitfalls of reverse mortgages.
Guy M. Wong, CPA
Editor’s note: The JofA published a more comprehensive article on reverse mortgages, “ Going Forward With Reverse Mortgages ” (Jul.06, page 35).