Much like a traditional forward mortgage, a Reverse Mortgage does have fees associated with securing it. The following list explains some common fees you may have to pay when obtaining your Reverse Mortgage.
Origination Fee – The origination fee covers the lenders operating expenses associated with making the Reverse Mortgage.
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 up to a cap of $6,000.
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.
If the appraiser uncovers a significant problem you will be required 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 HECM Reverse Mortgage loan. The initial MIP will be .5 percent or 2.5 percent, depending on the amount you request to be disbursed. 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 unless you choose to payoff the loan while you or a non-borrowing spouse are still living in the home.
Closing Costs – Additional costs which are generally incurred while obtaining a Reverse Mortgage include:
Thank you for the opportunity to assist with your Reverse Mortgage planning! If you would like a few short educational videos, please request a QuickQuote or PersonalQuote by following the links provided below. No credit inquiry is required, our QuickQuote requires only basic information while our PersonalQuote will provide you a more accurate illustration of your personal goals. We are also happy to speak by phone, feel free to call 970-222-0816 (voice messages will be returned promptly).