The loan officer will charge an origination fee. This is the fee paid to the loan agent to pay for his time and services. The origination fee is limited, under the HECM program, to two percent of the first $200,000 of the loan and one percent after that, limited to six-thousand dollars. Under the HECM program, which accounts for most of the reverse mortgages issued, borrowers have to pay a mortgage insurance premium (MIP). This is two percent of the original loan amount and a smaller amount paid each year throughout the life of the loan. The MIP protects the client should the lender go out of business. It allows for the government to step in to assure the homeowner has access to their funds. It also makes sure the terms of the loan are not changed even if the loan amount might exceed the value of the home.
How The Loan Amount Is Determined
Another required fee for a reverse mortgage is the valuation. The appraisal sets the value of the property from which the amount of the reverse mortgage is determined. An appraisal will cost between three hundred and four hundred dollars.
The Final Fees Charged For A Reverse Mortgage
Customary mortgage closing costs will also be part of the fees charged for the reverse mortgage. This includes a required credit report for the borrowers, a fee to determine if the property is within a federally designated flood plain and set escrow charges, document preparation fees and more. The total cost ranges from five hu
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