Typical Closing Costs for an FHA Reverse Mortgage and Some Helpful Information

Reverse Mortgage closing costs vary according to the program. The Saver programs (the FIXED and LIBOR adjustable) have reduced mortgage insurance premiums (known as M.I.P.) The only fees a borrower will pay out of pocket, however, are the appraisal fee and the HECM counseling fee. When you consider the benefits of a Reverse Mortgage and the alternative of moving out of your home or selling your home, a Reverse Mortgage can be a great choice.

Settlement / Closing fee
Depending on where you live, an attorney or a title company will settle your loan and help you execute your closing documents.

Title insurance
Lender's title insurance protects the lender against any loss arising from disputes over ownership of a property. This fee varies by the size of the loan. The higher the mortgage amount, the higher the cost of the title insurance. If you have a mortgage to pay off and it closed within ten years, there will be a re-issue rate so the title premium will be reduced. There are additional title fees such as search fees, endorsements, and recording fees. Recording fees vary by county. There are additional fees to record current outstanding mortgages, liens or federal judgments.

Credit report fee
A credit report verifies if there are any federal tax liens or judgments against the property. The credit report fee is charged per single borrower or as a joint credit report and can be anywhere from $12.50 to $25.00.

Flood certification fee
Flood zones are land areas identified by the Federal Emergency Management Agency (FEMA). Each flood zone describes that land area in terms of its risk of flooding. A flood certificatoin will determines whether a property is located in a federally designated flood zone. Food certifications cost approximately $10.00.

Additional Inspections
Your appraiser may note on his appraisal the need for a termite inspection, oil tank inspection, or roof inspection. These are occassionally requested and are not required unless suggested by the appraiser. For further information on Reverse Mortgages, please refer to http://www.Hud.gov.

Many of the same costs associated with obtaining an FHA mortgage also applies to Reverse Mortgages. The fees associated with a Reverse Mortgage are as follows:

Origination Fee
"You will pay an origination fee to compensate the lender for processing your HECM loan. A lender can charge a HECM origination fee up to $2,500 if your home is valued at less than $125,000. If your home is valued at more than $125,000 lenders can charge 2% of the first $200,000 of your home's value plus 1% of the amount over $200,000. HECM originaion fees are capped at $6,000." (Quote from http://www.hud.gov).

Mortgage Insurance Premium
"You will be charged a mortgage insurance premium (MIP) at closing which is either 2% for the HECM Standard or .01% HECM Saver of the lesser of the appraised value of your home, the FHA HECM mortgage limit for your area or the sales price. Over the life of the loan, you will also be charged an annual mortgage premium that equals 1.25% of the mortgage balance."

Appraisal Fee
Appraisal fees generally range between $450-$600 depending on the type of dwelling (single family, multi family, etc. ) An appraiser will assign an opinion of value to your home. The appraiser must also make sure there are no major structural defects such as: poor foundation, leaky roof, termite damage, leaking oil tank, etc. Federal regulations mandate that your home be structurally sound and comply with all home safety codes.

Other closing costs which are part of the Reverse Mortgage process and are typical of any mortgage are as follows:

Different Types of Reverse Mortgages

Structuring Your Reverse Mortgage

Reverse Mortgage Safeguards

What About My Heirs?

HECM for Home Purchase

Steps to Getting Started

Reverse Mortgage Counseling

Links and Resources

• Free Reverse Mortgage information, call 1-888-843-9797