It is a known fact that any topic in the realm of real estate is often controversial. This constant is, for the most part, an ongoing process of to and fro that genuinely varies case to case. This is true of nearly all processes and systems within real estate but it is especially true in aspects and points that reflect or otherwise surround the aspect of real estate that focuses inherently on investing. For example, when one hears the term “reverse mortgage”, there is a general consensus that this is a controversial (to say the least) choice for any homeowner. However, the truth of the matter is quite the opposite - as long as you approach a reverse mortgage from an educated perspective.
The importance of doing your own research 
It doesn't matter who you are. No one should ever jump into a process like this without first having successfully done your due diligence. Essentially, the reverse mortgage scheme was created to give older civilians a chance to basically unlock their home’s equity. The purpose of this is to boost the cash income of the homeowners. It is a scheme that has proven to be very helpful many times, but for those who do not understand the importance of insuring this type of mortgage, it can prove to be decidedly dangerous. Educating yourself on the reality of points like reverse mortgage insurance is so important.
What you need to know about reverse mortgage insurance
Most people who hear the term “mortgage insurance” assume if you passed away that insurance is there to protect heirs by paying off the mortgage balance, this is false. Mortgage insurance premiums, often referred to as MIP is a fee paid to the government to insure Reverse mortgage borrowers against future losses. In 2020, the FHA charges 2% of the lending limit upfront as well as .5% ongoing for the life of the loan.
FHA uses these funds to pay out future losses should you live beyond life expectancy or your home value drop lower than your current outstanding loan balance at the time of maturity. Alternatively, borrowers with high value homes in excess of the 2020 HECM lending limit may find proprietary or JUMBO options more appealing as these programs do not carry any upfront or ongoing mortgage insurance premiums.
A final note
Caution: A loan without mortgage insurance will come at a higher interest rate and possibly tighter underwriting guidelines, so shop both programs and compare their amortization schedules to find the lowest cost of borrowing. Of course you should always ensure to do your research before investing, but it has never been as important as it is in the case of a reverse mortgage. You always want to ensure that you have the right insurance so that you are never caught off guard. This is too big a risk otherwise. However, when you do the research it can be the biggest reward.
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