Insurance

Have you thought about a reverse mortgage, but have heard how much they cost? It may have been a bit disheartening and kept you from doing the reverse loan. But now there are several programs that have reduced or even eliminated fees.

The amount of fees you have will vary depending on the type of loan you choose. But the biggest difference comes when you compare the Saver and Standard programs.

Let's see a couple examples of how much the upfront mortgage insurance is on Standard reverse loans:

• If your home appraised for $150,000, the fee would equal $3,000.
• If your home appraised for $450,000, you would be paying a whopping $9,000 for the mortgage insurance.

The good news is that this fee is normally financed into the loan, but the fact is, it is still there. If you are doing a Standard reverse mortgage, this fee is unavoidable.

HECM Saver - The HECM Saver program was designed to keep the costs down for the home owner. Where a standard reverse mortgage would have upfront mortgage insurance of 2% of the appraised value, the new Saver program does not.

Would you like a fixed rate versus a line of credit or a monthly income?

A fixed rate loan requires you draw all the available equity, and since loan officers get paid based on the amount you draw, there can be room for negotiations. If you draw nothing and keep it in a line of credit, or choose the monthly income option, then the loan officer will not be able to waive origination fees, since there is no "bonus" from the lender.

Picking a fixed interest rate, the HECM Saver has potential to have virtually no fees. The upfront mortgage insurance is waived and there is a possibility that the origination fee could also be waived. It depends on your loan officer and the lender they are doing the loan with, but it is not out of the question.

Just think, all the benefits, with almost no cost. By almost no cost, I mean for less than your average loan you would take on a home. You could do a loan for hundreds of dollars, not thousands.

You have just seen that you have some options on the fees associated with a reverse mortgage. A little more research will help you decide if the HECM Saver program is better for you than the Standard reverse mortgage.