Many people ask, “Why do reverse mortgages cost so much?” The truth is, all the fees fall into three main buckets—each serving a specific purpose.
The first bucket is the Upfront Mortgage Insurance Premium, which goes directly to FHA. This fee ensures that the loan is non-recourse, meaning you or your heirs will never owe more than the home's value, even if the loan balance exceeds it. The second bucket covers third-party fees, including appraisal, credit reports, title, escrow, and recording costs—these go directly to service providers, not the lender. Lastly, the origination charge is what lenders are allowed to charge for facilitating the loan, capped at $6,000 by HUD.
While these costs may seem high, they serve to protect homeowners and their families while ensuring the loan process runs smoothly. Want to learn more? Call me at 707-285-0504, and let’s explore how a reverse mortgage might fit into your retirement plans. Aloha for now!
