How much are the closing costs on a Reverse Mortgage?

There is an old saying that there is no free lunch and that is particularly true in mortgage and real estate transactions.  The closing costs for a reverse mortgages are similar to those for a forward mortgage, including escrow, title insurance, appraisal, up front mortgage insurance and origination fees.

In general these fees are not going to vary much between lenders, with the exception of an origination fee which can and should be looked at closely. Depending on the loan type the origination fee can be from zero to six thousand dollars.

Normally the highest cost on a standard HECM reverse mortgage is the up front mortgage insurance premium. This is a fee required by HUD that insures the lender against any loss on the loan and is not negotiable. The premium rate is set by HUD and is the same for everyone offering HECM reverse mortgages. There is a Saver HECM with lower up front premium, but at a cost that I will address separately at a later time.

Generally, all closing costs can be financed into the loan so you pay little or no out of pocket expenses. Nevertheless, it is important for you to know the cost involved for your specific loan because these costs will become part of the loan balance.

 

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