AZ Loans.com - Specializing in Reverse Mortgages

    Origination Fee
    Under the HECM program, which accounts for 90 percent of all reverse mortgages made in
    the U.S., the origination fee is equal to the greater of $2,000 or 2 percent of the maximum
    claim amount (i.e., county FHA loan limit). Currently, the FHA loan limit varies from a low
    of $200,160 (for rural areas) to a high of $362,790 (for high-cost metropolitan areas). Therefore,
    the 2 percent origination fee generally ranges between $4,003 (2 percent of $200,160) and
    $7,256 (2 percent of $362,790).

    Home Keeper borrowers are charged an origination fee that may not exceed 2 percent of the
    value of the home. With either product, the entire amount of the origination fee may be
    financed as part of the mortgage.

    Mortgage Insurance Premium
    Under the HECM program, borrowers are charged a mortgage insurance premium (MIP), equal
    to 2 percent of the maximum claim amount, or home value, whichever is less, plus an annual
    premium thereafter equal to 0.5 percent of the loan balance.

               **The MIP guarantees that if the company managing your account – commonly called
               the loan “servicer” – goes out of business, the government will step in and make sure
               you have continued access to your loan funds. Furthermore, the MIP guarantees that
               you will never owe more than the value of your home when the HECM must be repaid.

    Appraisal Fee
    An appraiser is responsible for assigning a current market value to your home. Appraisal fees
    generally range between $300-$400.

    In addition to placing a value on the home, an appraiser must also make sure there are no major
    structural defects, such as a bad foundation, leaky roof, or termite damage. Federal regulations
    mandate that your home be structurally sound, and comply with all home safety codes, in order
    for the reverse mortgage to be made.

    If the appraiser uncovers property defects, you must hire a contractor to complete the repairs.
    Once the repairs are completed, the same appraiser is paid for a second visit to make sure the
    repairs have been completed. The cost of the repairs may be financed in the loan and completed
    after the reverse mortgage is made. Appraisers generally charge $50-$75 dollars for the follow-up
    examination.

Closing Costs
Other closing costs that are commonly charged to a reverse mortgage borrower, include:

Credit report fee. Verifies any federal tax liens, or other judgments, handed down against the borrower. Cost: Generally under $20
Flood certification fee. Determines whether the property is located on a federally designated flood plane. Cost: Generally under $20
Escrow, Settlement or Closing fee. Generally includes a title search and various other required closing services. Cost: $150-$450
Document preparation fee. Fee charged to prepare the final closing documents, including the mortgage note and other recordable items. Cost: $75-$150
Recording fee. Fee charged to record the mortgage lien with the County Recorder's Office. Cost: $50-$100
Courier fee. Covers the cost of any overnight mailing of documents between the lender and the title company or loan investor. Cost: Generally under $50
Title insurance. Insurance that protects the lender (lender's policy) or the buyer (owner's policy) against any loss arising from disputes over ownership of a property. Varies by size of the loan, though in general, the larger the loan amount, the higher the cost of the title insurance.
Pest Inspection. Determines whether the home is infested with any wood-destroying organisms, such as termites. Cost: Generally under $100
Survey. Determines the official boundaries of the property. It's typically ordered to make sure that any adjoining property has not inadvertently encroached on the reverse mortgage borrower's property. Cost: Generally under $250

   Service Fee Set-Aside
     The service fee set-aside is an amount of money deducted from the available loan proceeds
     at closing to cover the projected costs of servicing your account.

     Federal regulations allow the loan servicer (which may or may not be the same company as the
     originating lender) to charge a monthly fee that ranges between $30-$35. The amount of money
     set-aside is largely determined by the borrower's age and life expectancy. Generally, the
     set-aside can amount to several thousand dollars.

                        (Note: The servicing set aside is just a calculation and not a charge. The only amount added
                                 to your loan balance is the monthly servicing fee, which ranges from $30-$35.)

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