Reverse Mortgage Fees
by Francine Huff
December 21st, 2009
December 21st, 2009
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When borrowing with a reverse mortgage, it’s important to know what fees you’re responsible for paying. The following list breaks down the fees you can expect to pay with a Home Equity Conversion Mortgage (HECM), which is the most popular reverse loan program in the U.S.
- Origination fees pay for the the services of the mortgage lender. If you obtain a reverse mortgage for a home worth up to $125,000, you pay a flat fee of $2,500, according to the MetLife Mature Market Institute. For homes worth more than $125,000 the fee is based on 2% of the home’s value up to $200,000 plus 1% of the amount over $200,000. Origination fees are capped at $6,000.
- Mortgage Insurance Premiums (MIP) guarantee that if your mortgage loan servicer goes out of business you still have access to your HECM funds. It also warrants that you won’t owe more on a reverse loan than your home is worth when it’s time to pay back the money. MIP paid upfront is 2% of the value of your house up to the FHA lending limit. There’s also an annual premium of 0.5% of the reverse loan balance.
- Appraisal fees cover the analysis of the value of your home. Appraisers also check to make sure there are no major structural issues, such termites or a bad foundation. If serious problems are found, you must correct them before a reverse mortgage is approved. Appraisals generally cost $300 to $400.
- Closing costs include third-party charges associated with getting a reverse home mortgage. These costs may include fees for attorneys, title search, inspections, property taxes, etc.
Compare Reverse Loan Deals
Many of the upfront costs associated with getting a reverse home mortgage can be wrapped into the loan. To get a better idea of how much these fees may add up to and how much money you can borrow, begin comparing reverse loan quotes here.
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