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Reverse Mortgage Costs

What types of fees are incurred with a reverse mortgage?

Almost every reverse mortgage has an origination fee, which is paid to the lender for processing the loan. In the case of a HECM, the lender/broker can charge up to $2,500 if your home is worth less than $125,000. If the property is valued over $125,000, the lender can charge up to 2% of the value up to $200,000 and 1% of the amount over $200,000. FHA – HUD regulates the maximum origination fee at $6,000.00. Lenders also charge a servicing fee to offset the costs of servicing and maintaining your loan through its maturity. Typically, servicing fees range from $30-$35 a month.

Other closing costs include third party fees such as an appraisal, title, recording fees, mortgage taxes, credit checks, surveys, and possibly other items required by the lender.

The HECM Reverse Mortgage is an FHA insured mortgage, this insurance is often referred to as MIP or Mortgage Insurance Premium, which can be financed as part of the loan. Borrowers are charged a 2% MIP upfront at closing. There is also a monthly MIP that is .5% of the mortgage balance. The FHA insurance insures the borrower that no matter what happens to the lender your home, equity, line of credit, monthly payments are all protected.

Most costs can be financed into the mortgage, which makes it possible for most borrowers to avoid any upfront expenses.

[Related: Reverse Mortgages and Regulation Z and Reverse Mortgage Fees]

Some of the information on this web site may be outdated. Please check with a licensed reverse mortgage professional for the most up-to-date guidelines.

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Learn more about how people are using home equity conversion mortgages for purchasing homes:

Please keep in mind that the reverse mortgage industry is constantly changing and some of the information contained on this site may not be current. Please ask a licensed reverse mortgage professional for up-to-date guidelines.