Nice, easy to understand overview of reverse mortgages.

A reverse mortgage is just what it sounds like — instead of a homeowner making payments to the bank to pay off a mortgage, the bank pays the homeowner who has a significant amount of equity built up. The lender, in return, puts a lien on the property.

I was surprised by the costs, however.

According to the AARP, upfront and ongoing costs for a 74-year-old borrower in a $250,000 home in May 2006 could be about $25,000 — not including interest. For that, the homeowner could draw about $1,000 in monthly payments.

Almost all lenders charge adjustable interest rates on home-equity-conversion loans. Other costs include origination fees, third-party closing costs, mortgage insurance premiums and servicing fees.

But Mr. Bell points out that most often the cost of the appraisal is the only one that may need to be paid at the outset. Remaining costs often get paid with loan proceeds.

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