Like any mortgage loan, there are a variety of fees associated with obtaining a reverse mortgage.
Tips for a homeowner on the costs which are associated with a reverse mortgage. The fees include both the up front fees and the closing costs associated with securing a reverse mortgage.
What are the up front fees when applying for a reverse mortgage?
Usually a mortgage lender will only require a borrow to pay for a credit report and an appraisal as an up front cost to beginning the reverse mortgage application process. An appraiser will evaluate the current market value to your residence. Appraisal fees generally range between $300-$400. A credit report is generally in the range of $75. A borrower will also need to attend a reverse mortgage counseling session, if he or she is obtaining the reverse mortgage loan through the HECM program. This fee will also need to be paid out-of-pocket by the borrow and is generally under $100.
What are the closing costs associated with a reverse mortgage?
The origination fee varies depending on the lender. Under the HECM program, which is the program that most reverse mortgages are funded under in the US, it equals 2% on the first $200,000 of maximum loan amount and 1% on any balance leftover. The origination fee cannot exceed $6,000.
Some other common closing costs are: flood certification fee ($20), Closing fee ($150-$450), Document preparation fee ($75-$150), Recording fee ($50-$100), Courier fee ($50), Title Insurance (depends on the loan amount), Mortgage insurance premium (2% of the loan amount at closing and then a monthly amount thereafter), Pest inspection fee (under $100), Servicing/Set-up fee ($35 a month) and Survey fee ($250). The fees will vary depending on the lender, the loan amount and the geographical area where the property is located. All of these fees may be rolled into the loan amount and financed by the loan proceeds itself, during the closing.
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