Based on information dated 6/24/14
The truth about the No Fee Reverse Mortgage
If you are looking for a No Fee Reverse Mortgage, good luck! Despite what common ads may indicate, there is no such thing as a No Fee Reverse Mortgage. I hate to break it to you, but every single HUD approved reverse mortgage has fees.
The following fees are present in every single reverse mortgage. The catch is, does the lender pay for it, or does the fee come from the proceeds of the borrowers funds. Either way, the fee is present and someone has to pay it.
|IMIP||IMIP – Initial Mortgage Insurance Premium. This is the most costly of the fees. It can range in upwards to $15,000 depending on the value of the home. This fee is mandatory on all reverse mortgages. The lender cannot pay for IMIP. It comes out of the proceeds of the loan.|
|Origination||The fee in which the lender charges to do the reverse mortgage. The origination fee can vary from product to product. For some products, the lender is required to charge an origination fee. Whereas, other with other products, the origination fee can be waived. The maximum an origination fee can be is $6,000. This fee comes out of the loan proceeds, not the borrowers pocket. The origination fee is determined by the value of the home.|
|Title Fee||Title fees are determined by the value of the home. The higher your home value, the higher the title fee. This fees can be paid for by the lender.|
|Escrow||Escrow fees can vary. In most cases, escrow is done by a third party escrow company. This fees can be paid for by the lender.|
|Counseling||The Counseling fee usually costs around $95. The counseling fee is out pocket prior to the beginning of the reverse mortgage application.|
|Appraisal||Appraisal fees usually run about $450. This can be paid by anyone.|
|Interest and Monthly MIP||In addition to the above closing costs, interest and a monthly MIP accrue on the outstanding loan balance.|
An example of a Reverse Mortgage estimate is provided below. As you can see here, and any other legitimate estimate, there are fees.
|Home Value||$ 450,000.00||$ 450,000.00|
|Lending Limit||$ 625,500.00||$ 625,500.00|
|Maximum Claim Amount||$ 450,000.00||$ 450,000.00|
|Principal Limit||$ 226,800.00||$ 240,750.00|
|– IMIP (fee)||$ 11,250.00||$ 11,250.00|
|– Origination (fee)||$ 6,000.00||$ 3,500.00|
|– Other Costs (fee)||$ 2,867.95||$ 2,867.95|
|Remaining Principal Limit||$ 206,682.05||$ 223,132.05|
|Liens and Mortgages||$ 200,000||$ 200,000|
|Available Principal Limit||$ 6,682.05||$ 23,132.05|
|Total Mandatory Obligations||$ 220,117.95||$ 217,617.95|
|– % of Principal Limit||97.05 %||90.39 %|
|Initial Disbursement Limit||$ 226,800.00||$ 240,750.00|
|– % of Principal Limit||100.00 %||100.00 %|
Advertising 0 Fee Reverse Mortgage can be misleading. So when looking for a Reverse Mortgage, consider your sources, ask questions, and choose wisely.