Reverse Mortgage Fee Limitations
Are there any limits to the upfront charges a Forest Grove Oregon bank may charge for getting a reverse mortgage?
Answer:
The majority of reverse mortgages today are insured by the Federal Housing Administration (FHA), for its Home Equity Conversion Mortgage (HECM) program. The specific fees listed below are for HECM loans. In addition to HECM reverse mortgages, some Forest Grove Oregon mortgage companies could possibly have what are called proprietary reverse mortgages or ones that are not insured by the FHA, which often have different fees.
This is a list of common costs that lenders in Forest Grove charge at the start of a home loan.
The Upfront Mortgage Insurance Premium (MIP) is a one-time, nonrefundable fee.
Origination fee. An origination fee is what the lending company or mortgage loan officer charges you in making the HECM reverse mortgage loan. Loan companies may charge an origination fee of up to $6,000 for these particular loans. For houses valued at lower than $400,000, the maximum origination fee for these types of loans is determined on a sliding scale between $2,500 and $6,000, based on the value of the property. For homes worth more than $400,000, the top origination fee for these loans is $6,000.
Real estate settlement (closing) costs. These are the exact same costs you will pay to obtain a standard mortgage. They include appraisal, title insurance, and inspection charges.
Tip: There are no specific restrictions on these expenses, so take the time to obtain multiple proposals and assess fees.
Reverse mortgage counseling costs are charged by the counseling agency, not the lending company. Counseling typically costs around $125, and consumers are responsible for having to pay this cost right to the counseling agency. Low-income consumers can frequently get this fee waived, for that reason don’t forget to ask your counselor if you are eligible.
Paying for initial costs.
Plenty of Forest Grove Oregon borrowers choose not to pay for their initial costs out of pocket. Rather, lots of borrowers use a part of their loan funds to pay the initial charges.
Example: Let’s say you’re eligible for a $100,000 mortgage loan, and initial expenses are $8,000. You might decide to use $8,000 of the loan funds to fund the initial costs, as an alternative to coming up with $8,000 from other savings. Even so, consequently you’d only get $92,000 of the $100,000 loan.
Tip: Think hard before choosing to pay for initial costs utilizing your loan proceeds.
Paying for upfront fees with loan proceeds is more expensive than paying them out of pocket. If you are using your loan proceeds to pay for initial costs, you will be charged interest and recurring mortgage insurance on these expenses. This means the amount of money you will pay for these costs will be more in comparison with if you covered them out of pocket.
Tip: Talk to your reverse mortgage counselor about which option is best for you.