Reverse Mortgage Fee Limitations
Are there any restrictions to the upfront charges a lender may charge to get a reverse mortgage?
Answer:
A good number of reverse mortgages today are insured by the Federal Housing Administration (FHA), in its Home Equity Conversion Mortgage (HECM) program. The specific costs listed below are for HECM mortgage loans. In addition to HECM reverse mortgages, some Corvallis OR mortgage companies could possibly have what are identified as proprietary reverse mortgages or ones that are not insured by the FHA, which might have different fees.
This is a list of common fees that mortgage lenders in Corvallis charge at the outset of a mortgage loan.
The Upfront Mortgage Insurance Premium (MIP) is a one-time, nonrefundable charge.
Origination fee. An origination fee is what the mortgage company or mortgage broker charges you to generate the HECM reverse mortgage loan. Mortgage lenders may charge an origination fee of as much as $6,000 for these particular loans. For houses valued at less than $400,000, the maximum origination fee for these types of loans is assessed on a sliding scale between $2,500 and $6,000, dependant upon the value of the property. For homes worth more than $400,000, the maximum origination fee for these loans is $6,000.
Real estate settlement (closing) costs. These are the same costs you’d pay to get a traditional mortgage. These include appraisal, title insurance, and home inspection charges.
Tip: There aren’t any specific limitations on these costs, so take the time to obtain multiple proposals and compare fees.
Reverse mortgage counseling cost is billed by the counseling agency, not the lender. Counseling generally costs about $125, and consumers are responsible for paying for this cost directly to the counseling agency. Low-income individuals can frequently get this fee waived, for that reason make sure to ask your counselor in case you met the criteria.
Paying for initial costs.
A large number of Corvallis Oregon borrowers choose not to pay for their upfront fees out of pocket. In its place, a lot of consumers use a percentage of their loan funds to pay the upfront fees.
Example: Let’s say you’re approved for a $100,000 mortgage loan, and upfront expenses are $8,000. You may choose to use $8,000 of the loan funds to cover the initial costs, instead of coming up with $8,000 from other savings. Even so, because of this you would only receive $92,000 of the $100,000 loan.
Tip: Think carefully before deciding to cover initial fees using your loan proceeds.
Paying for upfront expenses with loan funds is more expensive than paying them out of pocket. If you are using your loan proceeds to pay for upfront costs, you’ll be charged interest and ongoing mortgage insurance on these costs. This means the amount of money you’ll pay for these costs will be more as compared with if you paid for them out of pocket.
Tip: Talk to your reverse mortgage counselor about which option is best for you.
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