Reverse mortgages are a great option as long as she plans to stay in the home for at least another 5 years.

Fees are 2% origination, roughly another $2k for other closing costs, some amount for MIP insurance (I think 2%), and there will be a servicing fee set-aside that most people interpret as a direct “cost” but is merely put into an escrow account to pay monthly sevicing fees of around $35, and won’t be exhausted unless she lives to 110 or something).

She can take a lump sum, line of credit or a monthly income from the home. The amount taken will accrue interest at a rate of around 3-4% – but that’s an adjustable rate based on the 1-year treasury. There is a fixed option as well, I believe the rate is around 6%.

With a $200k home she can probably “liberate” around $125k. She doesn’t have to pay back the loan unless she dies or moves out of the house – ultimately the heirs end up selling the house or taking out a mortgage and keeping it. The house stands for the debt so the heirs can never owe more than the house is worth.

If you have any more questions, feel free to ask. I am not a reverse mortgage lender but have been involved in the reverse mortgage industry for the past 6 years.

One thing I do see in the industry to be extremely wary of – a lot of slimeballs are out running around telling people to put the cash from the reverse mortgage into an annuity or some other insurance product. Every modeling scenario I have ever ran shows that this is a BAD idea, and if someone suggests it to you or your relative you know not to do business with them.