Reverse Mortgage Fees
As with any home mortgage product, there are a number of fees associated with a reverse mortgage that you should be aware of when considering your options. Some reverse mortgage fees are added to the loan's principal, so they are not due during the life of the loan. As reverse mortgages are insured by the Federal Housing Administration (FHA), the FHA allows borrowers to "roll" many reverse mortgage fees into the total amount of the loan, which lowers out-of-pocket costs. However, some other reverse mortgage fees are due at or before the date of closing. This article outlines both types of reverse mortgage fees, though borrowers should always discuss and confirm fees with their agent prior to closing.
To learn additional information about reverse mortgage fees, please call one of our experienced reverse mortgage agents at Citizens Lending Group today at (800) 480-6828 or use our convenient online contact form to find out more about reverse mortgage requirements and fees.
Reverse Mortgage Fees Included in the Loan
Some common fees that may be able to be rolled into the total amount of the loan include the following:
- Loan Origination Fee: This fee covers the lender's costs in making the loan to the borrower.
- FHA Mortgage Insurance Premium: As discussed above, reverse mortgages are insured by the FHA. In exchange for this insurance, borrowers pay a small premium. This protects the borrower in case the value of the house depreciates below the value of the loan or if the lender goes out of business. Your upfront mortgage insurance charge is based on the size of the loan and how much you choose to take out in the first year.
- Interest: Interest is charged on all reverse mortgage loans. The amount of interest charged on a reverse mortgage loan depends on whether the rate is fixed or variable, and is often "compounded" - added to the principal of the loan. Unlike other reverse mortgage fees, borrowers rarely pay interest out-of-pocket.
Additional Out of Pocket Reverse Mortgage Fees
As with any loan product, borrowers will likely face miscellaneous reverse mortgage fees and closing costs that must be paid when the loan is closed. These are common expenses and fees that are incurred when obtaining any type of mortgage or equity loan. While many of these fees are paid up front when the loan is closed, depending on the loan and the individual borrower, some of these reverse mortgage fees may be financed into or along-side the loan as well.
These fees may include:
- Appraisal Fee
- Counseling Fee
- Credit Reporting Fee
- Flood Certification Fee
- Inspection Fees (including air testing, pest control, etc.)
- Recording Fees
- Title Insurance
Many borrowers opt to pay for these upfront reverse mortgage fees using their loan funds, rather than out of pocket. Paying for these reverse mortgage fees with loan funds may be more expensive than paying for them out of pocket, because interest will be charged to the additional fees over the cost of the loan. However, it is beneficial for those who do not have the funds otherwise available to afford these expenses.
Learn More Information About Reverse Mortgage Fees
If you need help understanding the reverse mortgage fees that may be associated with your reverse mortgage loan, Citizens Lending Group is here to provide you with more information. Call us today to learn more about reverse mortgage fees or reverse mortgage requirements, and we will be happy to help!