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BOOK REVIEW

Reverse Mortgages Simplified

June 14, 1998|ROBERT J. BRUSS | SPECIAL TO THE TIMES

For as long as I can remember, the lone crusader for senior citizen reverse mortgages has been Ken Scholen. His National Center for Home Equity Conversion has brought about the current abundance of reverse mortgages.

Reverse mortgages pay people over age 62 either a lump sum or monthly payments, which need not be repaid until the homeowner either dies, moves or sells the home.

Today, reverse mortgages are easily available from major lenders such as Fannie Mae, Transamerica, FHA and others. Scholen is the pioneer whom thousands of senior homeowners should thank for giving them the financial wherewithal to remain in their homes after they became property rich and cash poor.

In his newest book, "Reverse Mortgages for Beginners," Scholen has written what he calls a "Web site companion" to his reverse mortgage Internet site, which contains even more resources.

The book's mouse symbol tells the reader when to go to the Web site for more information. The book's dedication is "to the 94-year-old Miami woman who called one day and said 'I found you through the Internet.' "

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Not only does this new book explain the reverse mortgage basics, such as who is eligible and what the limitations are, but Scholen goes into the major differences and pitfalls of each type of loan. He uses many tables to compare the principal reverse mortgages available nationwide.

Scholen emphasizes the importance of the federal Total Annual Loan Cost, which each reverse mortgage borrower must be given by the lender before signing any documents.

Since reverse mortgages contain substantial up-front fees taken from the senior homeowner's equity, the interest rates are very high in the first years of a loan. But the older the loan gets, the lower the annual interest rate becomes.

Senior citizens in the market for a reverse mortgage, as well as adult children looking out for the welfare of their parents, need search no further.

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"Reverse Mortgages for Beginners" by Ken Scholen (NCHEC Press, 7373 147th St., Suite 115, Apple Valley, MN 55124; [800] 247-6553), 1998, 132 pages, $14.95. Available in stock or by special order at local bookstores or in public libraries.

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