Much like a traditional mortgage, a HECM Reverse Mortgage does have fees associated with securing it. The following is a list explaining common Reverse Mortgage fees you may have to pay.
Please note that many Reverse Mortgage product rate offerings have lender credits that can reduce borrower closing costs significantly.
Origination Fee – The origination fee covers the lenders operating expenses associated with making the Reverse Mortgage. This can include things like overhead, marketing and title searches.
With an HECM Reverse Mortgage your origination fee is equal to the greater of $2,500 or 2% of the first $200K in home value plus 1.0% of the second $200K in value up to a maximum of $6,000. In most U.S. counties the origination fee will be between $4,000 and $6,000 ($6,000 is the maximum). Other Reverse Mortgage programs, like the Home Keeper, keep the origination fee to 2% of the value of the home. Origination fees can be bundled into the total mortgage.
HUD Counseling: The usual cost for required HUD counseling is $125-$150 dependent on the selected counseling agency.
Appraisal Fees – Before a Reverse Mortgage loan can be approved, an appraiser will come to your home and inspect it. The appraiser will be looking to determine the worth of your home based mostly on condition, location and the current market situation. The cost of an appraisal is generally between $350 and $450.
If the appraiser uncovers a significant problem you will be required to hire a contractor to fix the problem but the problem does not necessarily need to be fixed before obtaining a Reverse Mortgage. Depending on the extent of the problem, the estimate for the repairs may be "set aside" or otherwise termed "escrowed" from the proceeds of your new Reverse Mortgage. The repairs can then be completed after the closing of your new Reverse Mortgage and the same appraiser will come out again and re-inspect the property so the escrowed funds can then be released to the contractor that made the repairs. This is another example of the flexibllity of a HECM Reverse Mortgage.
Mortgage Insurance Premium – The mortgage insurance premium, often referred to as MIP, is a fee associated with the HECM Reverse Mortgage Program. This represents the insurance that is paid into a fund that insures your Reverse Mortgage loan. This fee is based on the value of your home and your principle limit or otherwise termed available equity advance at closing. If your initial disbursement is less than or equal to 60% of your principle limit (maximum allowable advance), then the fee is only .50% of the value of your home. If your initial advance exceeds 60% of your principle limit then the MIP will increase to 2.50% of the value of your home. The MIP is part of the normal closing costs associated with all Government Insured HECM Reverse Mortgages and is rolled into your new loan. The new variance for MIP costs up front are part of the government changes to the HECM Reverse Mortgage Program effective 10-1-2013. Ask about the significant advantages that the MIP insurance provides for both borrowers and their heirs with a HECM Reverse Mortgage.
The mortgage insurance premium guarantees that you will continue to receive your monthly payments and that you will never owe more that what your home is worth once the loan reaches maturity.
Closing Costs – Reverse Mortgage closing costs that are generally included are:
Apply Now to get started with your reverse mortgage application. We are your Reverse Mortgage Specialists, helping those, 62 and older, in Virginia, Maryland and Pennsylvania with Reverse Mortgages and leading them to a more sound and secure retirement.