Stop Whining to Your Lender About the Reverse Mortgage Costs
Closing a reverse mortgage loan will cost a good bit of money, and place of residence will not affect this fact. This is an essential truth that must be realized.
Usually, closing costs are around five percent of the home value, however if the house is considered on the low end in terms of worth, it could be up to 10%.
This can hit some borrowers hard when it takes them by surprise. Many times they consider the harshness of the transaction the loan company's fault.
So, who do we blame when there is no one else to blame? Mostly people like to point their fingers at the mortgage company. Those greedy pigs.
About 7 separate entities make up the entire closing process, the Federal government being one of these.
A closing document called the Good Faith Estimate of Costs separates and shows all of the closing costs, one of which is the origination fee. It is the sole fee from the bank.
Is it sizable? Yes. Does it take up the lions share of cost. No.
The culprit behind the bulk of the cost is the mortgage insurance. Two percent of the homes worth (for homes worth $417K and below) is billed to the borrower.
FHA can charge up to eight thousand, three hundred and forty bucks, while the bank charges as much as six thousand for origination.
This is newly legislated by the way. I think its funny that the government has no problem capping how much money the lender can make, but they don't cap how much they can charge.
By the way, were you solicited for political donations recently? Perhaps you thought you were on the big Do Not Call list, and you may be, but these guys conveniently left themselves out of that law.
Anyway, another big bite out of the costs comes from the escrow company. They have several fees, including a transaction fee, insurance for the title, and others.
Also add in the official appraisal cost. Sometimes a land inspection is needed as well. These fees are pretty expensive.
I can't speak from states outside of Texas. I wouldn't be surprised if borrowers are on the hook for other expensive little goodies there not mentioned here. Just remember the bank is not always the culprit.
Usually, closing costs are around five percent of the home value, however if the house is considered on the low end in terms of worth, it could be up to 10%.
This can hit some borrowers hard when it takes them by surprise. Many times they consider the harshness of the transaction the loan company's fault.
So, who do we blame when there is no one else to blame? Mostly people like to point their fingers at the mortgage company. Those greedy pigs.
About 7 separate entities make up the entire closing process, the Federal government being one of these.
A closing document called the Good Faith Estimate of Costs separates and shows all of the closing costs, one of which is the origination fee. It is the sole fee from the bank.
Is it sizable? Yes. Does it take up the lions share of cost. No.
The culprit behind the bulk of the cost is the mortgage insurance. Two percent of the homes worth (for homes worth $417K and below) is billed to the borrower.
FHA can charge up to eight thousand, three hundred and forty bucks, while the bank charges as much as six thousand for origination.
This is newly legislated by the way. I think its funny that the government has no problem capping how much money the lender can make, but they don't cap how much they can charge.
By the way, were you solicited for political donations recently? Perhaps you thought you were on the big Do Not Call list, and you may be, but these guys conveniently left themselves out of that law.
Anyway, another big bite out of the costs comes from the escrow company. They have several fees, including a transaction fee, insurance for the title, and others.
Also add in the official appraisal cost. Sometimes a land inspection is needed as well. These fees are pretty expensive.
I can't speak from states outside of Texas. I wouldn't be surprised if borrowers are on the hook for other expensive little goodies there not mentioned here. Just remember the bank is not always the culprit.
posted by Credit Counseling at
10:26 PM
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