Much like a traditional mortgage, a reverse mortgage loan 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 loan.
Origination Fee – The origination fee covers the lenders operating expenses associated with making the reverse mortgage loan. This can include things like overhead, marketing and title searches.
A lender can charge a HECM origination fee up to $2,500 if your home is valued at less than $125,000. If your home is valued at more than $125,000 lenders can charge 2% of the first $200,000 of your home's value plus 1% of the amount over $200,000.
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 loan. 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 loan plan. The initial MIP will be .5 percent or 2.5 percent, depending on your disbursements. Additionally, you will be charged an annual MIP that equals 1.25% 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 loan are:
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These materials are not from HUD or FHA and were not approved by HUD or a government agency.