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Reverse mortgage programs can offer financial benefits to seniors, but they are not without their costs. It’s essential to be aware of potential hidden fees that may impact your financial decision. In this short blog, we’ll discuss how to identify these hidden costs and fees associated with reverse mortgage programs.

  1. Origination Fees: Many reverse mortgage programs come with an origination fee, which is typically a percentage of the loan amount. While this fee is not hidden, it’s essential to understand its impact on your overall costs. Make sure to inquire about the specific origination fee associated with the program you’re considering.
  2. Mortgage Insurance Premium (MIP): Home Equity Conversion Mortgages (HECMs), the most common type of reverse mortgage, require borrowers to pay an upfront mortgage insurance premium (MIP). This fee can vary, so be sure to get the exact amount for your loan. In addition, it also accumulates an annual MIP charge over time.
  3. Servicing Fees: Servicing fees cover the costs of managing your reverse mortgage. Although they might not remain hidden, they can still significantly impact your overall expenses.
  4. Interest Charges: Interest on the loan accrues over time. It’s crucial to understand how interest rates work in your specific reverse mortgage program and how they might affect the overall loan balance.
  5. Closing Costs: Just like traditional mortgages, reverse mortgages have closing costs that include appraisal fees, title insurance, and other expenses. These can add up, so ask for a detailed breakdown of these costs.
  6. Counseling Fees: Before obtaining a reverse mortgage, borrowers must undergo counseling with an approved counselor. While not a hidden fee, be aware that you’ll need to pay for this service.
  7. Ongoing Property Costs: Homeowners are responsible for property taxes, insurance, and maintenance of the home. Failure to meet these obligations can lead to foreclosure. These ongoing expenses are important to consider.