When you take out a reverse mortgage, there are a few fees that you’ll have to pay – either upfront or deducted from the amount of home equity you borrow through your reverse mortgage.
We’ve broken down all fees below so you know exactly what to expect when you opt for a reverse mortgage to access some of your home’s
equity.
Upfront fees
The only upfront cost you’ll have to pay is for an appraisal. An appraisal is an unbiased estimate on the value of your home that certifies the property’s worth to the reverse mortgage lender. Your lender needs to know that your home is a good investment, especially since you won’t be making regular payments on the loan.
Appraisal costs vary, but you can typically expect to pay between $300-500. It’s important to note that this fee is payable even if you later decide not to opt for a reverse mortgage.
Costs deducted from your borrowed funds
While you can choose to pay your legal fees upfront, most reverse mortgage borrowers have them deducted from the total amount borrowed. You’re paying the same amount either way, so it makes sense not to pay upfront.
There are two sets of legal costs associated with a reverse mortgage:
- Independent legal advice
- Legal, administrative and set-up fees
Independent legal advice must be sought by anyone considering a reverse mortgage product to ensure you understand this type of mortgage and that you’re choosing to go this route based on information passed along by your lawyer.
Much like appraisals, legal fees also vary depending on the professional you use. You can typically expect to pay $500-700 in legal fees for your independent advice.
Legal, administrative and set-up fees are paid every time you get a mortgage – not just a reverse mortgage. These fees cover the legal cost of registering the mortgage on title, plus all other lender and administrative fees. You can expect to pay up to $1,795 to cover these costs.
Do you have questions about whether a reverse mortgage may be the right solution for you or a loved one? Answers are just a call or email away.