Reverse mortgages are costlier compared to other types of loans, as per the Consumer Financial Protection Bureau. Compared to traditional mortgages, the loan you own will grow the longer you draw from the mortgage.
A lot of seniors may find themselves needing cash for family support, healthcare, or retirement. In case you are at least 62 years old, and you’ve built up equity in the house you own, then a reverse mortgage could be the best way to tap into that equity.
Reverse mortgages let qualifying people to get cash right away, through a lump sum, monthly payments, or line of credit, and in return, you will give up the home equity upon the home sale once the loan comes due.
Costs Associated With A Reverse Mortgage
In case you are interested in a reverse mortgage Myrtle Beach, you need to know that there are different fees as well as other costs linked to getting one. These will include origination fees, closing costs, mortgage insurance, and interest payments.
There are generally one time costs such as origination fees, which have been capped at $6,000. You will also cover the closing costs that would include the inspection, credit checks, and appraisal fees, and more. Data from the National Reverse Mortgage Lenders Association indicates that the closing costs from HECMs or Home Equity Conversion Mortgages begin at $600 and go up to over $2,000, based on the loan size and where you reside, even though you might be able to add all these costs onto the loan. You will also be on the hook for the initial mortgage insurance premium, which is about 2%of the appraised value of the house up to the FHA lending limit of about $726,525.
There will also be the ongoing fees linked to your reverse mortgage loan like the annual mortgage insurance premium flood insurance, property taxes, interest, and service fees.
Upfront Fees – one time costs that are linked to getting a loan. This include the origination cost, closing cost, and the first mortgage insurance premium.
Origination fee – one time payment to the lender for the costs linked to your loan. HECM lenders can charge 2% of the initial $200,000 or $2,500 of the value of your home and then 1% of the remaining home value. The fees for the HECMs have a limit of $6,000.
Mortgage Insurance Premium – Reverse mortgages need to buy mortgage insurance. You need to pay an upfront fee of 2% of the appraised value of the home and up to the FHA lending limit’s value, which is about $726,525.
Appraisal Fee – to get a reverse mortgage, you have an appraisal to find out the existing market value of your house. This is generally done in advance of getting the reverse mortgage and it is paid for out of pocket. The appraisal averages at $450, plus a $125 follow up fee in case you have to make repairs to make sure that your house is compliant.
Closing costs – one time set of fees but could be extensive as well as highly variable based on where you live, what requirements are needed for the loan you need, and the value of your home.
Call Reverse Mortgage Specialist if you need more information about the fees and costs associated with this type of loan.
Reverse Mortgage Specialist
1293 Professional Drive, Suite 204
Myrtle Beach, SC 29577