News, updates, and explanations to keep you informed.
FHA Reverse Mortgage Payments and Fees
FHA reverse mortgages are designed to help borrowers age 62 and older borrow against the equity in their homes. FHA Reverse mortgages, also called FHA HECM loans, are based on a variety of factors. Your application will be considered in light of the information in your credit report, plus the appraised value of your home, and current interest rates. The advantage of an FHA reverse mortgage includes no monthly FHA mortgage payments as long as the property is used as the primary residence.
WHEN DO I MAKE MY FHA REVERSE MORTGAGE PAYMENTS?
FHA reverse mortgage are designed for you to pay off the loan's principal (including accrued interest) once the house is sold or it stops being your primary residence. Once the home is sold and the FHA HECM loan is paid off, any remaining equity is yours. If your heirs are selling the home, any remaining equity is given to them once the loan is paid off.
A major benefit of FHA reverse mortgages or FHA HECM loans? Borrowers can never owe more than the appraised value of the home, even if the housing market takes a turn for the worse. This benefit is possible through FHA mortgage insurance. If your home sells for an amount less than what is owed to the bank, the FHA pays the rest. You can't go into debt as a result of an FHA reverse mortgage home loan. Once the home is sold and the loan is paid (up to the appraised value of the home,) the borrower's obligation is over.
Will I Need To Pay For Mortgage Insurance On My FHA Reverse Mortgage?
Yes. You will pay a mortgage insurance premium. Other FHA reverse mortgage or FHA HECM loan fees include servicing charges, origination fees and typical closing costs.
HOW MUCH ARE THE FEES?
While your actual costs depend on a variety of factors, FHA reverse mortgage origination fees are limited to no more than $6000. These origination fees depend on the value of your home. How much could you pay? Up to $2500, if the value of your home is less than $125,000. Is your home worth more than that amount? If so, your fees will total 2% of the first $200,000 in value plus 1% of the value above $200,000.
OFFSETTING FHA REVERSE MORTGAGE FEES
If you wish to finance FHA reverse mortgage fees and build them into the cost of the HECM loan, you may do so. It's important to know that when financing these costs you will get a reduced final total of the loan money coming to you. If you were approved for a loan of one hundred thousand dollars, for example, the amount coming to you would be one hundred thousand minus the closing costs and other fees. If you have the means to pay your FHA HECM fees up front and wish to do so, make arrangements with your loan officer--you will get the full amount you're entitled to receive.
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