reverse mortgage basics

Reverse Mortgage Financing Fees

Reverse mortgage loans often require financing fees. Consumers sometimes use the money they receive from the reverse mortgage itself to cover these. This is known as “financing the loan costs.” Once the fees become part of the loan balance, what usually happens?

1. Interest accrues on the financing fees and both the fees and interest must be repaid as part of the loan balance.
2. No interest is charged, but the fees still become part of the loan balance.
3. The financing fees are waived once the loan has been in place a certain period of time.

“A” is correct. The financing fees charged on a reverse mortgage loan may be higher than those on conventional mortgages due to insurance costs. When added to the balance with interest, these fees will increase what you owe over time.