COSTS FOR REVERSE MORTGAGE

Many costs that apply in a home purchase loan apply to a reverse mortgage, but are “wrapped” into the mortgage costs, e.g., origination fee, up-font mortgage insurance program (for HECM), an appraisal fee and other standard closing costs. Most are capped.
Origination fee: covers lender’s operating expenses including office overhead, marketing costs, etc. Fee is equal to the greater of $2000 or 2% of the maximum claim amount (i.e., country FHA Loan Limit). Mortgage Insurance Premium: A mortgage insurance premium equal to 2% of the maximum claim amount, or home value, whichever is less is charged plus an annual premium thereafter equal to .5% of the loan balance. Therefore if the company managing your account (“loan servicer”) goes out of business, the government will step in and make sure you have continued access to your loan funds. The MIP guarantees that you will never owe more than the value of your home when the HECM must be repaid. Appraisal Fee: An appraiser calculates the current market value of your. Appraisal fees generally range between $300 and $400. The appraiser must also make sure that there are no major structural defects (e.g., bad foundation, leaky roof or termite damage). A contractor must repair any defects found, and the appraiser revisits to be sure the repairs have been completed. Repairs costs can be financed in the loan and completed after the reverse mortgage is made. Appraisers generally charge $50-$75 for the follow-up examination.