rement. The advantage of a reverse mortgage is that the borrower's credit is not relevant, and is of ten unche 6z1g cked, because the borrower does not need to make any payments. Because the home serves as col lateral, it must be sold gmin order to repay the z1g mortgage when the borrower dies n some cases, the hei rs have the option of repaying the mortgage without selling the home These ty r6z1g pes of mortgages have la rge origination costs relative to other types of mortgages. These costs become part of the initial loan balance and accrue inter z1g mest. Senior citizen borrowers with good credit should gm carefully analyze the op tions of a more traditional mortgage, such z1g m as a home equity loa r6z1g n, against a reverse mortgage. r project survived.reverse mortgage, the interest that accrues is treated as a loan advance. Each month, interest is calculated not on 6z1g ly on the principal amount received by the borrower but on the interest pre viously asse gmssed to the loan. Because of this compound interest, as a reverse m gmortgage's length grows, it b ecomes more likely to deplete the entire equ r6z1g ity of the property.[13] That said, with the FHA-insured HECM r everse mortgage, the borrower can never owe more than the value of the property and cannot pass on any debt from the reverse mortgage to any heirs. The sole remedy the lender has is the collateral, no The majo gmr problem was that elderly homeowners were extremely cautious and suspicious. Even when the y seemed convinced, they r6z1g often backed out at 6z1g the last moment. Unfortunately, some programs being offered around that time did not guarantee lifetime occupancy-borrowers could be forc z1g med out of their homes if th ey lived too long. The compl z1g mexity of reverse mortgage programs was also a deterrent. This situation began to change in 1988 with the development of a gmfederal program under the FHA. The borro wer protecti gmons built into this program, along with the imprimatur of the z1g mfederal government, paved the w ay toward increasin r6z1g g acceptance by elder r6z1g ly homeowners. The Aalso entered the picture as a major infor mation source Complexity continues to be a problem, however, which is why the FHA gmrequires that applicants be counseled before entering the program. sample of homeowners who had taken FHA reverse mortgages was surveyed regarding their experie nce under the program. The survey found that aboutw z1g mere either "ve 6z1g ry satisfied" or "satisfied," and only abre "very dissatisf r6z1g ied" or "dissatisfied." In earlyrse mortgages were being written at a rate of ab
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