With some uncertainties on the horizon for reverse mortgages, there are several alternative ways that families can set up a reverse mortgage-style agreement that still allow retirees to tap into their home equity, a Wall Street Journal article reported this weekend. The article suggests that as an alternative to a FHA-backed HECM loan, families with well-off adult children could set up their own private reverse mortgages for their parents, or could buy their parents’ homes outright and help fund retirement that way.
Further, the article suggests, the best time to do a reverse mortgage may be right now.
“Families with well-off adult children have tended to avoid reverse mortgages, in part due to the costs,” the article states. “The upfront fees can total as much as 5% of a home’s value. As part of the upfront costs, borrowers are required to pay a mortgage-insurance premium ranging from 0.1% for loans with a lower equity payout to 2% for those with a higher payout.”
Read the full article at the Wall Street Journal
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