Reverse Mortgage Fees Guideline

Closing Costs

Some of the most significant loan closing costs are typically the Federal Housing Administration (FHA) initial Mortgage Insurance Premium (MIP), loan origination fee, and title insurance. Typically, all closing costs can be financed as part of the loan.
Generally, when you close the loan the only out of pocket fee is the Housing and Urban Development (HUD) required independent counseling. Although it cannot be paid by the reverse mortgage lender, often times the counseling fees can be financed into the loan and sometimes counseling fees can be waived by the counseling agency.

Mortgage Insurance

HECM fees include the Initial FHA Mortgage Insurance Premium paid at closing, which is 2% of the home value not to exceed $13,583, as well as an annual MIP of .5% of the outstanding mortgage balance. 
The mortgage insurance provides the following guarantees:
  • The HECM is a “non-recourse” loan. If you sell the home to repay the loan, you or your heirs will never owe more than the loan balance or the value of the property, whichever is less; and no assets other than the home must be used to repay the debt
  • If the lender becomes insolvent or otherwise fails to make payments due to the borrower, MIP ensures that the borrower will continue to receive their payments

Loan Origination Fee

The origination fee is the lender’s fee. The maximum fee is set by law according to a formula:
  • 2% of the first $200,000 of the property’s value and 1% of the amount over $200,000
  • A maximum of a $6,000 origination fee

Title Fees

Title fees are required for all types of mortgages and primarily consist of:
  • Title insurance (the largest component)
  • Title settlement
  • Title examination
  • Recording
  • Delivery
  • Notary
  • Document preparation

Home Appraisal

The home appraisal determines the market value of the property. A reverse mortgage loan appraisal must be conducted by a FHA-approved appraiser and meet the required guidelines.

Other closing costs

  • Flood Certificate
  • Wire Fee
  • Credit report

Interest

Interest accumulates on a reverse mortgage loan just like on a traditional mortgage. However, instead of paying down the balance, the loan balance increases over time.
Reverse Mortgage Fixed Interest Rates :

Reverse Mortgage Variable Interest Rates :

Location: United States

Comments

Post a Comment

Popular posts from this blog

How does a reverse mortgage work?

Reverse mortgage is a loan made by a lender to a homeowner using the home as security or collateral. With a traditional mortgage, the homeowner uses their income to pay down the debt over time. However, with a  reverse mortgage the loan balance grows over time  because the homeowner is not making monthly mortgage payments. A reverse mortgage loan typically does not require repayment for as long as the borrower(s) continues to live in the home as the primary residence, pays property taxes and insurance, and maintains the home according to the Federal Housing Administration (FHA) requirements or until the last homeowner has passed away or has moved out of the property. The amount of equity you can access with a reverse mortgage is determined by the age of the youngest borrower, current interest rates, and the value of the home. Please note that you may need to set aside additional funds from loan proceeds to pay for taxes and insurance. Source:
Read more

Conventional Mortgage Origination Drop!

Image
The title of my blog post today is not necessarily a big surprise. But the magnitude of this drop may be surprising to you. My chart below shows the monthly Conventional loan origination (Purchase and Refinance combined) from January 2009 to April 2010.  When comparing January 2009 to January 2010, you can really see how drastic the drop has been in Conventional loan origination . In January 2009, there was 389,460 Conventional loans as compared with January 2010 at 260,326 loans. See the chart below. We will monitor this and see what happens over the summer. Credit:  Conventional Mortgage Origination Drop!
Read more

Shopping for a Reverse Mortgage

Image
If you’re considering a reverse mortgage, shop around. Decide which type of reverse mortgage might be right for you. That might depend on what you want to do with the money. Compare the options, terms, and fees from various lenders. Learn as much as you can about reverse mortgages before you talk to a counselor or lender . And ask lots of questions to make sure a reverse mortgage could work for you – and that you’re getting the right kind for you. Here are some things to consider: Do you want a reverse mortgage to pay for home repairs or property taxes? If so, find out if you qualify for any low-cost single purpose loans in your area. Staff at your local Area Agency on Aging may know about the programs in your area. Find the nearest agency on aging at eldercare.gov, or call 1-800-677-1116. Ask about “loan or grant programs for home repairs or improvements,” or “property tax deferral” or “property tax postponement” programs, and how to apply. Do you live in a higher-valued home?
Read more