Cost a Factor in Reverse Mortgages

BY GUY M. WONG

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
Sacramento, Calif.

Editor’s note: The JofA published a more comprehensive article on reverse mortgages, “ Going Forward With Reverse Mortgages ” (Jul.06, page 35).

SPONSORED REPORT

Get your clients ready for tax season

These year-end tax planning strategies address recent tax law changes enacted to help taxpayers deal with the pandemic, such as tax credits for sick leave and family leave and new rules for retirement plan distributions, as well as techniques for putting your clients in the best possible tax position.

RESOURCES

Keeping you informed and prepared amid the coronavirus crisis

We’re gathering the latest news stories along with relevant columns, tips, podcasts, and videos on this page, along with curated items from our archives to help with uncertainty and disruption.