Reverse Mortgage costs are always a topic of discussion for those contemplating tapping home equity through the use of a reverse mortgage loan. At first blush the costs seem high compared to what we are used to with a traditional "forward" mortgage loan. However, one must consider the costs of selling...usually 5 to 6%, the cost of relocation to another domicile, sometimes improvements to the existing home before it can be listed for sale...the list goes on and on. So, please look closely at the overall costs of getting a reverse mortgage so you can age in your own home versus moving, downsizing or moving in with your children. Yes, the costs are higher than what you expected, but are they higher than the price of the trade offs mentioned above?

1. THANK YOU FOR REQUESTING YOUR COPY OF OUR REPORT
EXPLAINING THE COSTS OF OBTAINING A REVERSE MORTGAGE.
Reverse Mortgages are often criticized for having high closing costs. However,
if you start dissecting the costs of a reverse mortgage and compare those costs
to alternatives like selling your home and moving, you may find that the costs are
only high if you have other assets or sources of income to access other than your
home. If you truly need a reverse mortgage in order to make ends meet or for
other financial reasons, then you may realize that the costs are not too high given
your particular circumstances.
Don't fall into the trap of listening to the negative hype without doing your own
research. Find out what the true costs are and whether they are justified or not.
Compare the cost of a reverse mortgage to the cost of selling your home,
downsizing or moving into assisted living. Pull back the curtain and take a good
look, then make your own determination. Don't base your decision on an
uninformed friend, relative or media reporter.
Let’s take a closer look at what the real costs of a reverse mortgage are
and what these costs pay for.
The majority of reverse mortgage loans that have closed in the United States to
date, have been the FHA insured HECM (Home Equity Conversion Mortgage.)
Because these loans are insured by FHA and backed by HUD they are
considered to be the safest reverse mortgage loans available and usually offer
the most benefits and more choices of how you can elect to receive your loan
proceeds.
The guarantees that you receive with the FHA insured HECM reverse
mortgage loan are:
1. Under the tenure option you will continue to receive your monthly payments
from your reverse mortgage as long as you live in your home. That means that
even if you outlive your life expectancy and your house is not worth as much as
your reverse mortgage has paid you, you will continue to receive those
payments, until you permanently leave your home. Guaranteed!

2. 2. Your heirs or your estate will NEVER owe more on the loan than the value
of your home at the time the loan is repaid. Reverse Mortgage loans are nonrecourse loans. The lender can never come back to your estate or your heirs if
there is a shortfall at the time of repayment.
3. Additionally, if the lender should happen to go out of business or stop
offering reverse mortgage loans, (as was the case with Wells Fargo, Bank of
America and Financial Freedom, three of the biggest reverse mortgage lenders
in the U.S.) the FHA insurance guarantees that you will continue to receive your
monthly payments or have access to your credit line in accordance with the
terms of your original loan agreement.
If the FHA mortgage insurance was not available, you can be sure that there
would be very few lenders willing to make reverse mortgage loans with the
favorable terms that are offered to seniors today.
The cost of the initial FHA insurance premium is 2% of the home value or the
maximum FHA claim amount, whichever is less for the HECM Standard reverse
mortgage. The insurance premium along with other closing costs are rolled into
the loan. They are not upfront out of pocket expenses, they are simply paid by
you or your estate at the time the loan is repaid.
The HECM Saver reverse mortgage was rolled out in October of 2010, as an
answer to the objection of the "high costs" associated with obtaining a reverse
mortgage. The HECM Saver FHA insurance premium was reduced to .01% or
$62.50 whichever is less....essentially zero.
However, the HECM Saver reduces the maximum loan amount you are eligible
for by 10 to 20%, depending on your age(s). When deciding on which HECM
loan offering to choose, you will have to weigh the lower FHA insurance premium
cost against not getting as much money from the reverse mortgage loan. If you
have an existing mortgage balance to pay off, you may not be able to get enough
money from the HECM Saver, and will have to choose the HECM Standard.
But, for those that don't have a great need for the full loan amount, the HECM
Saver could be the more attractive choice.
The only way to really analyze all of this is to request a complete side by side
cost comparison and loan quote for all the HECM loans you are eligible for from
a licensed professional located near you. It's a major decision and one that you
should take your time making, so that you really get the most benefit for your
personal situation. Request a Quote Today!

3. Loan Servicing Fee:
A monthly loan servicing fee of up to $30.00 per month is charged to the
borrower as part of the overall closing costs. All lenders charge a loan servicing
fee. However, on a forward mortgage the loan servicing fee is incorporated into
the interest rate on the loan, so the borrower often times isn't even aware of it.
On a reverse mortgage the servicing fee is set aside upfront and is calculated
based upon the life expectancy of the youngest borrower. The lender receives
the servicing fee each month as long as the loan is in force. If the borrower
leaves the home permanently before the servicing set aside is exhausted, the
balance remaining is distributed to the borrower or the borrowers' estate.
Loan Origination Fee:
The loan origination fee is the fee that is charged by the lender to originate,
process and close your reverse mortgage loan application. FHA-HUD stipulates
that the loan origination fee is capped at 2 percent of the initial $200,000. and 1%
on the remaining balance, not to exceed a total maximum cap of $6,000. Some
lenders have been known to negotiate the loan origination fee and the loan
servicing set aside fee to compete for business.
The three fees mentioned above make up the lions' share of the closing costs for
a reverse mortgage. In addition to these three, you will have customary costs
that you are familiar with from previous mortgages that you have had. They are
fees such as, appraisal, credit report, flood certification, courier, recording,
document preparation, pest inspection, closing or escrow fee, title insurance,
survey. (This may or may not be a complete list, depending on your area of the
country.)
So Are The Costs Really Too High? - You Decide
It is best to view the costs in comparison to the value that you will receive from
the benefits of getting a reverse mortgage. You must evaluate the costs
compared to the improvement in your lifestyle, your increased monthly income,
and the fact that you are not burdening your family at this time in your life.
Personally you will not feel the impact of the closing costs. They are simply a
cost from your estate at the time your house is sold or refinanced and the loan is
paid off. It is foolhardy to reject the idea of getting a reverse mortgage based
strictly on the cost of this valuable financial planning tool.

4. After all, if you considered one of the obvious alternatives, which would be to sell
your home, you would be looking at paying 6% in real estate commissions as
well as typical sellers' closing costs and possibly some costly home repairs. You
would then have relocation costs for yourself which could include a down
payment of 5% - 20% for another home, moving expenses of $5,000. or more
and closing costs of 2% - 3% for a new mortgage. As you can see the cost of
selling your home far outweighs the cost of obtaining a reverse mortgage.
A Word of Caution:
Now that you know that reverse mortgage costs can be higher than the costs of a
traditional forward mortgage, hopefully you also have an appreciation for why
they are high. That being said, you probably are not a candidate for a reverse
mortgage if you anticipate permanently leaving your home in less than five
years. Five years seems to be the consensus among industry experts, to be the
critical time frame to remain in your home to make the costs worthwhile. If you
feel you will leave your home sooner than five years, you should consider
alternative options, such as a cash out refinance or a home equity loan to tide
you over until you sell or move out of your home.
We sincerely hope you have found this information beneficial for
assessing whether a reverse mortgage is right for you and your family.
We would be honored to assist you in locating a reputable reverse
mortgage loan adviser. If you would like your own computerized
analysis of how much money is available to you, please visit us again at
Let Your Home Pay You and complete the short questionnaire. You will
be contacted shortly, without pressure and without obligation.