Majority of the costs paid by someone to get a home purchase loan, existing mortgage refinancing are the same fees paid in reverse mortgages.
In most cases, capping and financing these fees and costs can be done as part of the reverse mortgage. Following is a thorough explanation of each type of fee.
Origination Fee
In making a reverse mortgage, operating expenses of the lender like overhead, marketing, etc. would have to be covered. This is the origination fee.
Mortgage Insurance Premium
The MIP guarantees that if the company servicing your account suddenly closes or goes bankrupt, the government will mediate to guarantee that access to loan funds is continued. In addition, the MIP assures that you will never be in debted to more than your home value when the HECM must be repaid.
Appraisal Fee
An appraiser is responsible for assessing the current market value of your home. The cost of appraising is usually ranges from $300 - $400.
Aside from the home value, an appraiser also ensures the soundness of the home which is covered by federal regulations. Soundness means the house must have no physical defect and complies with all home safety codes.
Once property defects are discovered by the appraiser, a contractor must be hired to finish the repairs. Once completed, payments are made for a second visit by the appraiser to check if repairs have indeed been completed.
Repair costs may be financed and completed after the reverse mortgage. In general, $50 - $70 is charged by appraisers for a follow-up examination.
Closing Costs
A borrower of a reverse mortgage will be charged the following closing costs :
Credit report fee.
Validates whether federal tax liens, or other judgments, had been made against the borrower. In general, it costs less than $20.
Flood certification fee.
Ascertains whether the property is situated on a federally chosen flood plane. The fee paid is less than $20.
Escrow, Settlement or Closing fee.
For an amount of $150 to $450, a title search and other closing services needed is done.
Document preparation fee. At $75 - $150, the final closing papers including the mortgage note and other recordable items are prepared.
Recording fee.
Generally costing $50 - $100, the mortgage lien is recorded with the County Recorder 's Office.
Courier fee.
Costing less than $50, the documents between the lender and loan investor is mailed overnight.
Title insurance.
This is a protection for the lender against losses incurred from property ownership disputes. The insurance cost may differ depending on the size of the loan.
Pest Inspection.
Covers the cost of determining termite infestation or any other wood-destroying organisms.
Survey. The cost is made to ensure that no other properties has been trespassed or encroached.
Servicing Set-Aside
The amount is paid as a coverage for projected costs of account servicing. This is deducted from the available loan limit at the time of closing.
John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the http://www.directonlineloans.co.uk website.
