Tips And Information On Reverse Mortgage Costs

Reverse mortgage loans can be a real blessing to many senior homeowners, providing them with much needed funds during their retirement years. But, as with any type of loan there will be costs associated with it. There will be appraisals, loan fees such as closing costs, etc. Here are some helpful tips and information on reverse mortgage costs.

To begin with, lenders will all generally some type of loan origination fee. This is the fee that pays for the lenders overhead costs for preparing the reverse mortgage loan. This fee will vary depending on the value of the home and which type of reverse mortgage loan you decide upon. For example, if you get a HUD reverse mortgage, you can expect to pay either $2,000 or two percent of the maximum FHA limit, whichever is greater. Under the Fannie Mae Home Keepers loan, this origination fee should not be more than two percent of your homes value.

Instead of paying for a home owners insurance policy on your home, you'll need to pay a mortgage insurance premium. This is required by the FHA. This premium allows HUD to back the reverse mortgage loan, and pay any amount due once the home has been sold to repay the loan. This premium also gives funding for HUD to enable your loan to be serviced in the event something were to happen to your loan service provider during the course of the reverse mortgage.

Next, you will be required to pay for costs of appraisal fees for your loan. An appraiser will come out and evaluate your home and determine its value, and also the amount of equity in the home. There is no getting around the appraisal fee since it is required. It is one of the major factors that will be used to determine the total amount of your reverse mortgage loan.

Finally, you will have closing costs and other minor fees that may also apply. This can include items such as credit reporting fees, document preparation, recording fees, courier fees, title insurance, and/or a survey of the property to determine boundaries. As a general rule of thumb you are most likely looking at a few thousand dollars in fees. The good news, however, is that all or most of the cost of your reverse mortgage will be rolled into the loan amount, so that up front costs are minimal.