Fees and Closing Costs
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Learn what costs to expect with a reverse mortgage.
If you have tried out our reverse mortgage calculator, you may have already noticed the fees and costs listed in the loan breakdown. Our fee schedule below will help you learn what costs to expect and why these fees are charged. You will have the opportunity to review a full estimate with a reverse mortgage specialist before you submit your application for a reverse mortgage. Most fees can be financed by the reverse mortgage, and they include charges for services similar to a traditional mortgage, such as the origination fee, closing costs, and service charges.
Fee Schedule |
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| Origination Fee | The origination fee covers the lender?s operating expenses to create the loan. With a Home Equity Converted Mortgage (HECM) loan, this upfront fee is limited to 2 percent of the maximum loan amount for the first $200,000, and one percent on the remaining balance. |
| Mortgage Insurance | The mortgage insurance premium, which is specific to federally insured HECM loans, guarantees that you will never owe the lender more than the value of your house and that you will continue to benefit from your reverse mortgage even if the lender were to go out of business. The insurance premium amount is 2% of the either the home value or the maximum loan amount, whichever is less. In addition, a fee of 0.5% of the loan balance is assessed yearly. |
| Counseling Fee | The U.S. Department of Housing and Urban Development (HUD) requires that those who would like to apply for a reverse mortgage undergo counseling to ensure they are comfortable with their financial decision. A nominal fee is charged for this service. |
| Service Fee | The service fee is set aside to pay for future costs of the loan, such as periodic home inspections, payment processing, and monthly account access. Generally, these fees cost about $30 per month for the duration of the reverse mortgage, though they vary depending on the lender. |
| Closing Fee | Closing fees differ based on the county and state where you reside as well as your individual circumstances. These fees take into account insurance, taxes and other fees related to closing your reverse mortgage. May Include: Appraisal Fee Title Insurance Fee Credit Report Fee Flood Certificate Escrow/Attorney Fees Settlement Fees Tax Service Fee Recording Fees Local/State Taxes Courier Fees Inspection/Survey Fees Notary Fees |
