Among the most popular reverse mortgage loans are the FHA insured HECM, home equity conversion mortgages, which have the following costs. 1. The mortgage insurance is 2 % of the appraised value. 2. The origination fee, the cap is 2 % of the first $ 200.000 and after that 1 %, with overall cap of $ 6000. 3. The insurance of the title. 4. The title, county recording and attorney fees. 5. The real estate appraisal $ 300 - $ 500. 6. The survey, in some cases, $ 300-$ 500 and 6. The monthly service fee, between $ 25 and $ 35.
1. All Costs Can Be Financed With The Proceeds Of The Reverse Mortgage Loans.
Because the biggest benefit of the reverse mortgage loans is, that they have no monthly fees, all the fees and costs will be rolled directly into the balance of the reverse loan. They are not paid every month by the borrower and this fact leaves more disposable money for him.
To take the reverse loan does not require cash money, nor cash monthly payments. This is why seniors with limited cash available can get these loans. We have to understand that all costs will increase the loan capital and consequently all the costs and fees will accrue the interest. So the compound interest accrued and all fees will be added to the loan principal.
2.The Reverse Mortgage Loans Interest Rates.
When a senior takes the reverse loan, the interest rate will be determined. Because the HUD backs these loans and because the loans are secured by the home itself, the interest rates should always be under the standard mortgage marketplace for a reverse mortgage of FHA. The interest rate is either an adjustable or fixed one.
3. The Fixed Interest Rates Are The Newest Ones.
The reverse market has many lenders, who offer FHA HECM loans with fixed interest rates. Some of these rates are similar to the FHA VA rate added with the premium of the mandatory mortgage insurance. The cash proceeds of some of the fixed rate reverse mortgages are limited to half of that, what the adjustable rate reverse loans use.
4. The Reverse Mortgage Loans For Special Purposes.
There is also a special market for the low cost reverse loans offered to seniors. The lenders are the public sector ones, like some states and governments, and these loans are meant for a special purpose, like home repair or property taxes. These programs are usually very restrictive as to the qualification and the location, but offer lower interest rates and fewer or no fees.
As you see from the above cost list, there are several costs, fees and interest rates, which depends on the offer you get. This is the reason, why it is very important to take several offers from many lenders, to talk with the people, who has the reverse loan, to get information from the net and to prepare yourself properly for the meeting with the counselor. To take the reverse loan is a long term decision and will influence on your life during a very long period.
