| Reverse Home Mortgage Interest and Fees - Understanding Reverse Mortgage Costs |
| Articles - Mortgage |
|
Yes there is a cost to securing a reverse home mortgage. The good news is that the four types of fees, plus interest, are common for all mortgage loans. The four fees are typical and are an origination fee, third-party closing costs, mortgage insurance premiums, and a small monthly fee. There is an option to roll the fees into the mortgage if that would work best for you.
Yes there is a cost to securing a reverse home mortgage. The good news is that the four types of fees, plus interest, are common for all mortgage loans. The four fees are typical and are an origination fee, third-party closing costs, mortgage insurance premiums, and a small monthly fee. There is an option to roll the fees into the mortgage if that would work best for you. The interest is determined by the Total Annual Loan Cost and can be compared to the APR (annual percentage rate) of common forward mortgage loans. There is one fee that must be paid upfront and cannot be rolled into the mortgage amount. This is the fee for the required HUD counseling service. Interests rates determine the actual interest cost and that can be determined by the rate you have secured. Two interest rate options are available for the reverse home mortgage. Both are beneficial an personal needs should be considered before choosing which option you prefer. One option is the fixed-interest rate. With the fixed-rate option borrowers are secure that they will have the same interest rate for the entire loan. The fixed-rate loan is paid out as a lump sum payment, one time, and is perfect for those needing access to the large funds earlier. The second option is the variable-interest rate. This option means that as interest rates fluctuate the interest being accrued will also vary. There is a bit more risk involved but also a lot more choice to the borrower. The choices involved with a variable-rate option are that it offers the greatest amount allowed in equity for disbursement to the borrower. With a variable-rate there are choices for an immediate advance of funds and provides several options for disbursement of funds. With the variable-interest rate the borrower has many options of distribution to choose from. The borrower can choose to have the funds as a line of credit, paid out in monthly installments or in a lump sum payment, as well as any combination of these options. The borrower can also change the way the funds are distributed at any time without cost. You plan how to use the funds and which option would provide what you need. Overall the fees and costs of obtaining a reverse home mortgage are parallel with the majority of other loans available with the additional benefit that your equity will be paid out to you how you chose and to be used as you see fit. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. If you would like to learn more about Jumbo Reverse Mortgages visit our website, Reverse Home Mortgage 101 for complete Reverse Mortgage information and resources. |