how expensive is a reverse loan
In my previous post I discussed the one fee or expense on reverse loans that conventional mortgages do not have. And that was the FHA insurance premium for MIP.
Conventional mortgages allow what some would call “Lender junk fees”, which typically are for processing, underwriting and other “back office” costs the lender will pass on to the borrower. And they can add up to additional $1800 to $2000 on a traditional mortgage.
But they are not considered “allowable fees” to a reverse mortgage borrower and cannot be charged and built into the loan.
What are the fees that a reverse loan applicant can expect?
- Flood Certificate – Pulled by the Appraiser
- Appraisal fee
- Credit Report
- All title settlement, title insurance, transfer fees and recording fees. These are based on the loan amount, the Title company and county or state.
- Document preparation fee
- Payees; all third party fee and third party providers must be disclosed on the HUD-1 Settlement Statement per RESPA. List all required loan fees, including fees paid outside of Closing on their worksheets.
All HECM/Home Equity Conversion Mortgage are subject to FHA’s requirements on allowable closing costs.
In my next post I will provide a list of fees that are not allowable and cannot be passed on to the borrower.