All FHA guaranteed reverse mortgages allow the lender to charge you from $25.00 to $35.00 to “service” your loan.
Servicing fees are the costs incurred at your closing. The costs built up during the process of the loan. This includes such expenses as processing the monthly paperwork for your loan, keeping track of the taxes on the house, and other menial but required tasks.
This fee is handled differently than most of the other fees. Servicing fees are set aside. The monthly fee – typically $30- $35 – is multiplied by the number of months they expect you to live in your home which is based on life expectancy. That amount is then deducted from the total amount of your available funds. It’s set aside until the monthly fee is added to your growing loan balance each month.
Your servicing fees are usually bundled up in to your loan balance and charged interest as well.
If you can afford to do it, you would be better off paying these fees up front to avoid the interest you will owe.
Only homeowners that are at least 62 years old are eligible to qualify for a reverse mortgage loan.
In addition, reverse mortgage rules dictate the home must be your primary residence.
If more than 1 one homeowner exists; both individuals are required to agree, apply for the mortgage, and sign the reverse mortgage agreement.
You must own your home outright or owe less than the value of the home. You must be able to pay off the balance at the time of closing on your reverse mortgage.
You are required to receive information from an approved HECM counselor prior to being eligible for obtaining the reverse mortgage loan.
The following types of homes qualify:
- Single Family
- 1 – 4 Unit Properties – Owner must occupy one unit
- Manufactured Homes
- Mobile Homes
It is important to understand that you are still the homeowner when you acquire the reverse mortgage. You’ll still be responsible for property taxes, and homeowners insurance must be kept current, as well as any needed repairs. A lapse in either insurance or taxes could result in a default on the reverse mortgage.