# What are the Costs of a Reverse Mortgage? – Orange County Reverse Mortgage – OCReverse.com [ Skip to content](#content) Orange County Reverse Mortgage – OCReverse.com Menu # What are the Costs of a Reverse Mortgage? / [FAQ - Frequently Asked Questions](/category/faq/) / By Orange County Reverse Mortgage Many of the same costs that someone pays to obtain a home purchase loan, or to refinance their existing mortgage, apply to reverse mortgages too. You can expect to be charged an origination fee, up-front mortgage insurance premium (for the FHA Home Equity Conversion Mortgage or HECM), an appraisal fee, and certain other standard closing costs. In most cases, these fees and costs are capped and may be financed as part of the reverse mortgage. Below is a more in-depth explanation of each type of fee. Origination Fee The origination fee covers a lender’s operating expenses—including office overhead, marketing costs, etc.—for making the reverse mortgage. Under the HECM program, which accounts for 90 percent of all reverse mortgages made in the U.S., the origination fee is equal to the greater of $2,000 or 2 percent of the maximum claim amount (i.e., county FHA loan limit). Currently, the FHA loan limit varies from a low of $200,160 (for rural areas) to a high of $362,790 (for high-cost metropolitan areas). Therefore, the 2 percent origination fee generally ranges between $4,003 (2 percent of $200,160) and $7,256 (2 percent of $362,790). With proprietary loans, borrowers are charged an origination fee that may not exceed 2 percent of the value of the home. With either product, the entire amount of the origination fee may be financed as part of the mortgage. Mortgage Insurance Premium Under the HECM program, borrowers are charged a mortgage insurance premium (MIP), equal to 2 percent of the maximum claim amount, or home value, whichever is less, plus an annual premium thereafter equal to 0.5 percent of the loan balance. The MIP guarantees that if the company managing your account – commonly called the loan “servicer” – goes out of business, the government will step in and make sure you have continued access to your loan funds. Furthermore, the MIP guarantees that you will never owe more than the value of your home when the HECM must be repaid. Appraisal Fee An appraiser is responsible for assigning a current market value to your home. Appraisal fees generally range between $300-$400. In addition to placing a value on the home, an appraiser must also make sure there are no major structural defects, such as a bad foundation, leaky roof, or termite damage. Federal regulations mandate that your home be structurally sound, and comply with all home safety codes, in order for the reverse mortgage to be made. If the appraiser uncovers property defects, you must hire a contractor to complete the repairs. Once the repairs are completed, the same appraiser is paid for a second visit to make sure the repairs have been completed. The cost of the repairs may be financed in the loan and completed after the reverse mortgage is made. Appraisers generally charge $50-$75 dollars for the follow-up examination. Closing Costs Other closing costs that are commonly charged to a reverse mortgage borrower, include: Top Credit report fee. Verifies any federal tax liens, or other judgments, handed down against the borrower. Cost: Generally under $20. Flood certification fee. Determines whether the property is located on a federally designated flood plane. Cost: Generally under $20. Escrow, Settlement or Closing fee. Generally includes a title search and various other required closing services. Cost: $150-$450. Document preparation fee. Fee charged to prepare the final closing documents, including the mortgage note and other recordable items. Cost: $75-$150. Recording fee. Fee charged to record the mortgage lien with the County Recorder’s Office. Cost: $50-$100. Courier fee. Covers the cost of any overnight mailing of documents between the lender and the title company or loan investor. Cost: Generally under $50. Title insurance. Insurance that protects the lender (lender’s policy) or the buyer (owner’s policy) against any loss arising from disputes over ownership of a property. Varies by size of the loan, though in general, the larger the loan amount, the higher the cost of the title insurance. Pest Inspection. Determines whether the home is infested with any wood-destroying organisms, such as termites. Cost: Generally under $100 Survey. Determines the official boundaries of the property. It’s typically ordered to make sure that any adjoining property has not inadvertently encroached on the reverse mortgage borrower’s property. Cost: Generally under $250 Service Fee Set-Aside The service fee set-aside is an amount of money deducted from the available loan proceeds at closing to cover the projected costs of servicing your account. Federal regulations allow the loan servicer (which may or may not be the same company as the originating lender) to charge a monthly fee that ranges between $30-$35. The amount of money set-aside is largely determined by the borrower’s age and life expectancy. All of the closing costs, with the exception of the appraisal, can be paid from your loan proceeds. ## Case Studies ## Free Quote & Consultation Risk-Free, Obligation-Free Quick Quote Request Form - Find out what you qualify for. * Required Fields * Name * Birthdate MM 01 JAN 02 FEB 03 MAR 04 APR 05 MAY 06 JUN 07 JUL 08 AUG 09 SEP 10 OCT 11 NOV 12 DEC DD 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 YY 1901 1902 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 1914 1915 1916 1917 1918 1919 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938 1939 1940 1941 1942 1943 1944 1945 1946 1947 1948 1949 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 * Street Address * Zip * Telephone * Email Address * Estimated Property Value ## Recent Posts ## Free Reports Menu ## Case Studies Menu ## Recent Updates ## 800-216-6322 17011 Beach Blvd. #900 Huntington Beach, CA 92647 ## Search This Site © 2023 Morningstar Mortgage, Inc. CA BRE License #01277889, NMLS ID# 241680 Disclaimer: This material is not provided from HUD nor FHA, and has not been approved by HUD or a government agency. [ Facebook ](https://www.facebook.com/MorningstarMortgage) [ Linkedin ](https://www.linkedin.com/company/morningstar-mortgage/about/)