Stop Whining to Your Lender About the Reverse Mortgage Costs
What is important to know is that no matter where you live the closing costs for reverse mortgages will be pretty high.
The cost of closing is determined using the value of the home, which is figured by an appraiser. It is generally five percent but can go up to ten if the home value is very low.
As a loan officer I get lots of calls from people who don't know this, and they often blame my company for the brutality of the deal.
It's the bank's fault that the costs are so high. Right? Well, I wouldn't say the bank isn't a part of the whole equation, but it's not the whole equation.
The totality of all the closing costs is made up of anywhere from 5 to 9 companies. And don't forget HUD.
A closing document called the Good Faith Estimate of Costs separates and shows all of the closing costs, one of which is the origination fee. It is the sole fee from the bank.
It's still a decent size fee, but it certainly doesn't take up the lion's share of costs.
The largest fee, typically, is the FHA mortgage insurance premium. FHA charges two percent of the value of the home up to $417,000.
At the most FHA can charge $8340. The highest the origination fee can be is $6,000.
This is newly legislated by the way. I think its funny that the government has no problem capping how much money the lender can make, but they don't cap how much they can charge.
By the way, were you solicited for political donations recently? Perhaps you thought you were on the big Do Not Call list, and you may be, but these guys conveniently left themselves out of that law.
Back to costs. The title or escrow company takes a big chunk of the costs as well, between title insurance, additional binders, and their fee for conducting the transaction.
The appraisal will be listed here as well, along with the costs of a land survey, which is required depending on where you live. The latter can run for quite a bit.
I don't know about every states specifications, but rest assured there are other little factors that add to costs as well, and as I said in the beginning, the lender isn't the only one to blame.
The cost of closing is determined using the value of the home, which is figured by an appraiser. It is generally five percent but can go up to ten if the home value is very low.
As a loan officer I get lots of calls from people who don't know this, and they often blame my company for the brutality of the deal.
It's the bank's fault that the costs are so high. Right? Well, I wouldn't say the bank isn't a part of the whole equation, but it's not the whole equation.
The totality of all the closing costs is made up of anywhere from 5 to 9 companies. And don't forget HUD.
A closing document called the Good Faith Estimate of Costs separates and shows all of the closing costs, one of which is the origination fee. It is the sole fee from the bank.
It's still a decent size fee, but it certainly doesn't take up the lion's share of costs.
The largest fee, typically, is the FHA mortgage insurance premium. FHA charges two percent of the value of the home up to $417,000.
At the most FHA can charge $8340. The highest the origination fee can be is $6,000.
This is newly legislated by the way. I think its funny that the government has no problem capping how much money the lender can make, but they don't cap how much they can charge.
By the way, were you solicited for political donations recently? Perhaps you thought you were on the big Do Not Call list, and you may be, but these guys conveniently left themselves out of that law.
Back to costs. The title or escrow company takes a big chunk of the costs as well, between title insurance, additional binders, and their fee for conducting the transaction.
The appraisal will be listed here as well, along with the costs of a land survey, which is required depending on where you live. The latter can run for quite a bit.
I don't know about every states specifications, but rest assured there are other little factors that add to costs as well, and as I said in the beginning, the lender isn't the only one to blame.
posted by Credit Counseling at
8:30 PM
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