Reverse Mortgage Costs: Your TALC
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Reverse mortgage loans are great products because of the flexibility they allow a person for repayment, but there are still aspects to them that you need to consider carefully before you decide whether or not a reverse mortgage is for you. The vast majority of reverse mortgage lenders in the market today use a statistic known as the TALC to help you as a customer determine which reverse mortgages might be more appropriate for your particular situation.

They do this because the reverse mortgage lenders recognize that understanding the complexities of the average reverse mortgage is difficult to do. With mortgages and home equity loans, all there really is to understand is interest and monthly repayments. With a reverse mortgage, you need to understand exactly how all of the fees apply to your particular loan, because the amount of principal you can get is affected by the size of the fees that you need to pay as well. The good news, however, is that because of that, you can pay off your reverse mortgage fees in the same way as you pay off the loan, so you don’t have to worry about it until after you sell the house or pass away.

The TALC

The TALC is an acronym that stands for the Total Annual Loan Cost. When a loan is being administered by a lender, there are a number of fees that they charge; this is also true for reverse mortgage loans. The total cost of these fees added together over a 12-month period is roughly what the TALC attempts to measure and as you might have been able to deduce already, it is a figure that is widely different for different reverse mortgages.

TALC Components

The first components of the TALC figure are going to be the fees that are actually associated with the reverse mortgage. These include things like the fees paid for obtaining credit reports and housing appraisals, fees for starting the loan process, fees for ending the loan process and regular service charges for maintaining your account. These are all fees that can be paid out of the equity of your home, but at the same time they are also fees that contribute to the TALC rate.

Calculating the TALC

Calculating the TALC is actually not an easy task, simply because the fees charged are going to be different depending on which reverse mortgage lender you decide to contract with. In fact, even within the same reverse mortgage lender, fees might be different across different reverse mortgage loans. Therefore, instead of trying to calculate the TALC yourself, what you should do is look for it in the details of any reverse mortgage offer that you see. If the TALC is not there, then you can contact the reverse mortgage lender and get them to provide you with that information.

Is it important?

In terms of practicality, if you don’t want to know what the TALC rate is, then you don’t really have to find out, because you can just pay it in the same way that you pay for the rest of the loan. However, if you are interested in the breakdown of the money that you are going to be paying back to the reverse mortgage lender, then the TALC is an important figure to have.

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