Posted: Wed Dec 28, 2005 3:33 am Post subject: Reverse Mortgage Costs
Costs associated with reverse mortgage are comparatively higher than traditional mortgages. In total, the closing costs range from 4% to 8% of the loan amount. Check out the reverse mortgage costs given below.
Originating fees: It is paid to the lender for preparing the paperwork and processing your loan. Under the Housing and Economic recovery Act, 2008, the origination fee has been cut down to 2% of the first $200,000 of the principal loan amount and 1% of the remaining loan. The fee shouldn't exceed $6000 in total.
The origination fee is capped at 2% of the loan limit or home value. But the cap may be adjusted on the basis of the annual percentage increase in the consumer price index. Under the law, lenders can't ask borrowers to purchase insurance, annuities etc as condition for getting reverse mortgage.
Third party fees: Third party costs include the fees required at the time of closing of the contract. Third party fees are the appraisal fee, attorney fee, title insurance fee, etc.
Insurance Premium: This type of premium guarantees that you will receive the promised loan amount in advance and you don't have to repay that amount as long as you stay in that house. For instance, the mortgage insurance premium or MIP offered under the HECM program guarantees you that if your lender goes out of business, the government will provide you with the loan funds.
The MIP makes sure that you don't owe more than the value of your home when the HECM is to be paid off. The premium charged in HECM is equal to the lesser of the home value or 2% of the maximum amount you can claim when you lender goes out of business. In addition, the MIP includes an annual premium equal to 0.5% of the loan balance.
I am thinking of applying for reverse mortgage and I know that on my age i can qualify for the mortgage. I also found some details on it from your site. But I still have lots to clarify. Can u tell me whom should I approach? Should I consult a lender directly or is there any other way?
Posted: Wed Dec 28, 2005 4:07 am Post subject: RE:
Hi,
It�s good that the information in our site could help you.
If you want, you can definitely consult a lender but it is advised that you meet an independent reverse mortgage counselor before applying for the loan. The lender may speak in favor of his loan programs and it may not be of much help. But the counselor will educate you on reverse mortgage and also inform you about other options that you can consider. He will be the best person to guide you in choosing the most suitable loan package.
Also, make sure that you have all the specific requirements for the loan and ask your lender for a good faith estimate of the costs involved in the reverse mortgage.
I don't think it will matter much if you apply for a reverse mortgage either through a mortgage broker or a bank. As far as I know, the rates and fees are more or less the same. _________________ Procrastination is the enemy of your financial sucess
Posted: Thu Mar 19, 2009 3:15 am Post subject: reverse mortgage
My mom is 84, she has 180000 tax debts, which have run up andis paying back a 150000 mortgage debt on her house- housevalue is about 700000 can sch still get a reverse mortgageg
Reverse mortgage is available if there is equity in the property. As your mom's property does not have equity, I doubt whether she would get a reverse mortgage.
It would be good for you if an attorney is present at the closing. However, the charges would differ from one attorney to another. _________________ Procrastination is the enemy of your financial sucess
Samantha
