Reverse Mortgage Fee Limitations

Are there any restrictions on the upfront fees a Portland Oregon lender can charge for getting a reverse mortgage?

Answer:

Almost all reverse mortgages today are insured by the Federal Housing Administration (FHA), as part of its Home Equity Conversion Mortgage (HECM) program. The particular costs listed below are for HECM loans. In addition to HECM reverse mortgages, some Portland OR lenders might possibly offer you what are identified as proprietary reverse mortgages or ones which are not insured by the FHA, which might have different charges.

Here’s a list of regular costs that loan providers in Portland charge at the start of a mortgage loan.

The Upfront Mortgage Insurance Premium (MIP) is a one-time, nonrefundable expense.
Origination fee. An origination fee is what the lender or mortgage broker charges you to generate the HECM reverse home loan. Mortgage lenders 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, according to the value of the house. For houses worth more than $400,000, the maximum origination fee for these home loans is $6,000.

Real estate settlement (closing) costs. These are the same exact costs you’d pay to take out a standard mortgage. These include appraisal, title insurance, and inspection fees.

Tip:

There aren’t specific limits on these fees, so take some time to obtain multiple proposals and compare fees.

Reverse mortgage counseling cost is charged by the counseling agency, not the mortgage lender. Counseling generally costs around $125, and consumers are responsible for having to pay this cost directly to the counseling agency. Low-income individuals might get this fee waived, so be sure to ask your counselor if you happen to qualify.

Paying for initial expenses.

A lot of Portland Oregon homeowners prefer to not pay for their upfront costs out of pocket. Instead, lots of borrowers use a part of their loan proceeds to pay the initial expenses.

Example: Let’s assume you’re authorized for a $100,000 home loan, and upfront expenses are $8,000. You could choose to use $8,000 of the loan proceeds to pay for the the initial costs, as an alternative to coming up with $8,000 from other savings. Having said that, because of this you would only have $92,000 of the $100,000 loan amount.

Tip: Think twice prior to deciding to cover upfront costs utilizing your loan funds.

Paying for initial costs with loan funds is more expensive than paying them out of pocket. When you use your loan funds to pay for upfront costs, you are going to pay interest and ongoing mortgage insurance on these fees. What this means is the total amount you’ll pay for these costs will be more as compared with if you paid for them with your own savings.

Tip: Talk to your reverse mortgage counselor about which option is best for you.

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