Assume an elderly person owns a $350,000 home that is free and clear of mortgage debt. A

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Assume an elderly person owns a $350,000 home that is free and clear of mortgage debt. A lender has agreed to a $350,000 reverse mortgage with monthly payments. The loan term is 15 years. The annual interest rate is 6%.

Suppose that there is $2,000 origination cost associated with the reverse mortgage and the elderly passes away in 5 years (60 months), what is the annual effective cost of the loan to the elderly?

6.3055%

7.3055%

None of the above

Posted Date: Jun 11, 2024 01:21 AM

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Assume an elderly person owns a $350,000 home that is free and clear of mortgage debt. A

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