Question:

What are the Total Annual Loan Costs (TALC) and how are they determined?

Answer:

Total Annual Loan Costs (TALC), also seen as TALK, refer to loan costs of reverse mortgage loans.

Total Annual Loan Costs (TALC) disclosed by lenders rarely take into account some particularly important factors about reverse mortgages, other than the reverse mortgage itemized costs - fixed or adjustable interest, upfront fees, closing and insurance costs.

Total Annual Loan Costs (TALC) Factors

The overall reverse mortgage Total Annual Loan Costs (TALC) largely depend on

  • How long you are going to stay on your property after you take a reverse mortgage?
  • Will property value rise or decline?

Lenders are required to show different Total Annual Loan Costs (TALC) scenarios upon obtaining a reverse mortgage. Under Federal Truth-in-Lending law lenders have to show TALC values for 0, 4 or 8% annual home appreciation and different time periods to take the mortgage for.

How much you are going to live, the market interest rates and at what rate your property will appreciate cannot be predicted with great certainty, but different TALC scenarios could tell you which scenario will be least expensive and what equity you may end up with.

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