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Reverse Mortgage Closing Costs

Saving on Loan Costs

While each provider offers the same FHA/HUD insured reverse mortgage program and protection, you will find that costs vary significantly.

Here are some tips for understanding your loan costs, evaluating the quotes you’ll receive, and negotiating your best price.

Non-Negotiable costs:

The U.S. Department of Housing and Urban Development receives a fee equal to either 2.00% of your property’s appraised value or the maximum FHA loan limit for your county of residence. That fee, the Mortgage Insurance Premium (MIP), is the largest non-negotiable cost, and will be between $5,000 and $6,000 in most cases.

Non-negotiable costs are:

1. HUD's Mortgage Insurance Premium,
2. government imposed fees, such as recording fees or taxes,
3. Flood Certification, and
4. Document Preparation fees.

Negotiable costs:

You also pay a loan origination fee to the lender who is providing you with your loan. That fee is the largest negotiable cost, and will be between $5,000 and $6,000 in most cases.

While the maximum fee cannot exceed 2.00%, some lenders will charge less. It pays to get several quotes and ask for your best price.

Negotiable costs are fees for:

1. Loan origination (FHA/HUD Insured and Fannie Mae Home Keeper),
2. Monthly service fee for the MIP (HUD/FHA only),
3. Apppraisal (depending on your locale) *
4. Escrow *
5. Courier*
6. Pest Control inspection*
7. Title Insurance*

*Probably not worth the effort but you can compare if you wish. We strongly recommend using a Title and Escrow company that understand reverse mortgages. Using a Title and escrow (or closing Agent depending on your State of residence) not familiar with the paper work can result in some monumental problems.

 

How much difference will I see in costs??

While there is no difference in the reverse mortgage protection and service you receive, the cost of the loan will vary significantly with each provider.

Some of the reasons are differences in overhead, profit margins, marketing expenses, and experience with reverse mortgage products. For example, our clients generally save well over several thousand dollars in costs. We can offer this savings because we specialize in reverse mortgages and have an established clientele.

To get your best price, request quotes from several providers before you commit. Know that you can negotiate.