Much like a traditional mortgage, a reverse mortgage does have fees associated with securing it. The following is a list explaining common fees you may have to pay when getting your reverse mortgage.
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 HEMC reverse mortgage your origination fee is equal to the greater of $2,000 or 2% of your counties FHA loan limit. In most U.S. counties the 2% origination fee will be between $4,000 and $7,300. 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.
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 $300 and $400.
If the appraiser uncovers a significant problem you will be required to hire a contractor to fix the problem before obtaining your reverse mortgage. That same appraiser will come out again and re-inspect the property.
Mortgage Insurance Premium – The mortgage insurance premium is a fee associated with the HEMC reverse mortgage plan. This fee is equal to 2% of your counties FHA loan limit or the value of your home, whichever is less. Additionally you will pay an annual premium of 0.5% of the loan balance.
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 – Closing costs that are generally included in a reverse mortgage are:
- Credit Report
- Document Preparation
- Flood zone certification
- Termite inspection
- Attorney’s fee and title examination
- Recording fees
- Escrow/Settlement fee
- Other fees
This material is not from HUD or FHA and has not been approved by HUD or a government agency.