Florida Reverse Mortgage Lenders. Reverse Mortgage Costs. Fees, Insurance and Interest Rates.


	Florida Reverse Mortgages Reverse Mortgage Costs Fees, Insurance and Interest Rates
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Reverse Mortgage Closing Costs
Fees, Insurance and Interest Rates

HECM Saver: Lower up-front Costs

October 4, 2010 With the newly introduced HECM Saver, the up-front mortgage insurance premium required by the Federal Housing Administration (FHA) is significantly reduced as compared to a HECM Standard. As a result, you could save thousands of dollars, depending on your home's value. While the maximum amount of money you can borrow is less than with a HECM Standard, lower costs may make it an attractive option.

The HECM Saver option requires an upfront FHA Mortgage Insurance Premium of only .01% of the home©s value, as compared to the 2% requirement for the standard FHA reverse mortgage loan.

HECM Standard Reverse Mortgage

Under the HECM Standard option, the upfront mortgage insurance premium will remain at 2% of the value of the property, or 2% of the maximum FHA loan limit of $625,500, if the property has a value greater than that.

FHA Mortgage Insurance

The FHA insurance provides three guarantees:

The homeowner cannot "outlive" the Reverse Mortgage
The homeowner and heirs will not be liable if the balance of the loan exceeds the value of the home.
The FHA will take over the loan if the lender defaults.

Origination Fee

The origination fee is what the Reverse Mortgage lender earns on the loan. The FHA uses a formula to determine what the lender can charge. The formula is:

2% of the first $200,000 of property value and 1% of the second $200,000 of property value
An absolute maximum of $6,000
A floor of $2,500

Title Fees

Title guarantees the homeowner's legal ownership of the property and is required for all mortgages whether reverse or conventional. The largest part of title fees is title insurance. Title fees are usually broken down into:

Title insurance (varies by state and with property value)
Title settlement
Title search/exam
Recording
Delivery/courier
Payoff (if a mortgage is being paid off)
Notary
Doc prep

Appraisal

The appraisal establishes the legal value of the home. A Reverse Mortgage appraisal must be conducted by an FHA-approved appraiser and follows specific FHA guidelines that require more documentation than a typical appraisal. A typical FHA appraisal costs $350-$550 depending on the state.

Other Closing Costs

Counseling
Wire Fee
Flood Certification
Credit Report

Interest

A Reverse Mortgage accrues interest just like a traditional mortgage except that the homeowner is not making payments each month to reduce the loan balance. As a result the loan balance grows until the homeowner permanently moves out of the property or passes away.

About two-thirds of Reverse Mortgage holders have adjustable rate reverse mortgages because the rate is usually lower than a fixed rate. Because the homeowners do not make monthly payments, homeowners are not usually as concerned about possible future change in the interest rate.

Interest Rates and FHA Mortgage Insurance

The interest rate on a Reverse Mortgage has fluctuated between 3% and 5%. The real interest rate is one half of a percentage point above the quoted rate because the total rate includes the FHA's ongoing mortgage insurance premium. For example, if the quoted rate is 4.1%, the rate with insurance is 4.6%.

Learn About All Reverse Mortgage Options
Toll Free Information
1-800-435-2170

HUD Reverse Mortgages are Guaranteed by the Department of Housing and Urban Development and Insured by FHA

HUD's Federal Housing Administration (FHA) created Reverse Mortgage Loans. Reverse Mortgages are also known as HECM's, Home Equity Conversion Mortgages. HECM Loans are a Safe Government Regulated Program.