Yes, I wrote a primer on reverse mortgages a little while back and came to same conclusions. Basically, it should be used as a last resort.from the CHIP website:
"Based on a CHIP Home Income Plan of $100,000, the annual percentage rate (APR), which is calculated as the rate of interest for the first year of the plan plus closing costs, ranges from 10.40% to 11.18%, depending on the interest rate chosen."
When a person can get a five year fixed rate mortgage at 3.69%, isn't this obscene?
In rough figures, if a person gets $100K from CHIP, and pays 11.18% in the first year, then 8.25% for the next 4; the total debt becomes $154,058 for a cost of borrowing of $54,058.
The cost of borrowing on a five year fixed mortgage at 3.69% is $20,059. for a difference of $34,000. Let's throw in closing costs of $2,000 for the normal mortgage; so there's still a $32,000 difference.
How much does Gordon Pape get?
Yeah, "wouldn't it be nice"....