Investing in a home may be one of the most significant purchases you’ll make in your lifetime, but many people forget that there are a number of other costs associated with buying a home. If you’re considering a reverse mortgage and want to be clear on all of the fees involved, here are a few things you can expect to come across.

Initial Home Appraisal Fee

In order to ensure that you qualify for a reverse mortgage, you’ll need to spend a lump sum up front to determine the market cost of your home. While the amount of this fee will depend on the size and age of your home, it generally runs from a couple hundred dollars to less than a thousand and will be paid to the appraisal company that you’re dealing with.

Mortgage Insurance Premiums

At the time that you close on your mortgage, you’ll be required to pay a mortgage insurance premium (MIP) in order to secure your loan. This amount will vary from lender to lender and will be calculated based on the lesser-appraised value of your home. In addition to this, annual mortgage insurance premiums will be charged throughout the entire period of the loan and will be a percentage of the outstanding balance of your mortgage.

Loan Origination Fee

In order to process and underwrite your loan, you will also be required to pay a loan origination fee, which covers the administrative costs. While this amount has come down in recent years, it is a sizeable lump sum that hovers around 2% of your home’s value up to $200,000. If the home’s value exceeds this amount, it will go down to 1% after the initial amount is charged.

Other Third Party Fees

Like any mortgage loan, there are a number of one times fees that you’ll need to pay in order to secure your mortgage. In addition to a monthly servicing fee, there will also be fees like surveying, title fees and credit checks that will be added on to the total cost of your mortgage product. It’s important before choosing this option to ensure that you know what costs you’ll be dealing with.

A reverse mortgage may be the right mortgage product for you, but it’s important to be educated of all of the costs before choosing this option. If you’re currently considering other mortgage products, you may want to contact one of our mortgage professionals for more information.

As a means of avoiding monthly mortgage payments, a reverse mortgage is a way for homeowners to tap into their equity in order to defer the payments on their home. While this can be a beneficial option for those who are older than 65, it’s important to be aware that – like any mortgage product – there are a number of associated fees. If a reverse mortgage is something you’re considering in the future, here are some of the costs you’ll be looking at.

Mortgage Insurance Premiums

In order to secure your reverse mortgage, you will be required to pay mortgage insurance premiums (MIP) at the time that you sign off on your reverse mortgage. The cost will be charged upon closing, and will continue to be charged throughout the entire period of the loan. While this amount will vary based on a variety of factors, it will be calculated using the lesser-appraised value of your home.

Origination Fee

Since a reverse mortgage is a different mortgage product, you may be required to pay an Origination Fee for all of the costs associated with processing the mortgage. This amount will differ depending on which lender you are using and it will equate to a small percentage of the total value of your home.

Servicing Fee

In addition to the fees required for switching your mortgage product, there will also be a monthly servicing fee to cover administration for the period of the loan. In addition to billing and statements, this amount will ensure that you are covered when it comes to your home purchase. While service fees are becoming a thing of the past, they are generally a relatively small amount of money.

Additional Third Party Fees

There are many fees associated with home ownership and a reverse mortgage is no different. As a result, there may be a number of third-party fees for items including appraisal costs, surveying, title fees and credit checks that will be required in order to close the process. Fortunately, most of these costs will be charged prior to or upon closing and will not persist throughout the mortgage period.

Many people would like to defer their monthly payment and utilize a reverse mortgage, but before deciding on this product it’s worth knowing what the associated costs are. If you’re currently considering your mortgage options and are wondering what is available, contact your trusted mortgage professionals for more information.