Question:

What are the reverse mortgage fees that can’t be avoided?

Answer:

There are many reverse mortgage fees, much like with any mortgage loan. Commonly, you can't avoid those and they add up to a significant sum. True, many reverse mortgage programs will have those rolled in the loan and if your home is situated in an appreciating area, it is possible that even heavy reverse mortgage fees will be amply compensated even with a minimal house appreciation.

However, having a 5% closing cost in reverse mortgage fees can be unpleasant if you and your home are not so lucky. Unfortunately, little can be done to avoid those fees.

Common Reverse Mortgage Fees

A reverse mortgage origination fee will be around 2% - either with the HECM program of the Housing and Urban Development department, or with the Fannie Mae's Home Keeper reverse mortgage program. You can't get wait from this fee and it usually will be included in the program.

Also, with a HECM you'll get to pay a Mortgage Insurance Premium (MIP) which accounts for 2% of the loan upfront. On top of that, a half percent of the loan balance will be due on a yearly basis. This reverse mortgage fee guarantees that in case your lender goes out of business for whatever reason, you will not be affected negatively and will continue to receive installments. It also guarantees you will never owe more than you borrowed initially. Luckily for you, there are lenders offering proprietary reverse mortgage programs, where you are not going to pay insurance if you don't want to. Choice is yours which reverse mortgage program to enroll in.

The appraisal fee is another reverse mortgage fee you can't run away from. Typically, you will pay up to $500 depending on number of visits and house size. However, this is going to be well-spent money if your house is in good condition and has appreciated in value since last appraisal.

Other indisputable reverse mortgage fees will be vary from 20$ for a credit report to $300 for an escrow account; different document processing fees, title insurance, recording fees, etc. will again have to be considered. For the exact listing of reverse mortgage fees, contact a reverse mortgage lender (or several of them) to compare terms and discuss them with a reverse mortgage counselor.

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