Reverse Mort Company Not Cause of High Closing Costs
What is important to know is that no matter where you live the closing costs for reverse mortgages will be pretty high.
If you have a very low valued home it can be as much as ten percent of your value. Typically it runs about 5% of your total value as determined by a licensed FHA appraiser.
This can hit some borrowers hard when it takes them by surprise. Many times they consider the harshness of the transaction the loan company’s fault.
You might be thinking that the lender is the reason closing is so expensive. Actually, that is just one factor in the big scheme of things to make this happen.
About 7 separate entities make up the entire closing process, the Federal government being one of these.
When you pull out the Good Faith Estimate of Costs, among the list of fees is one called the origination fee. This is the only thing that the bank itself bills the borrower.
Don’t get me wrong, the origination fee is still substantial. But it is not the majority of the cost.
Of all closing costs HUD charges the most of any company for homes valued between $100,000 and $417,000. They charge an insurance fee of two percent of value.
FHA can charge up to eight thousand, three hundred and forty bucks, while the bank charges as much as six thousand for origination.
This is newly legislated by the way. I think its funny that the government has no problem capping how much money the lender can make, but they don’t cap how much they can charge.
By the way, were you solicited for political donations recently? Perhaps you thought you were on the big Do Not Call list, and you may be, but these guys conveniently left themselves out of that law.
Where were we? Closing costs. The company issuing the title on the house is responsible for a good portion of the cost, with a number of fees such as a transaction, title insurance, and binder fees.
The appraisal will be listed here as well, along with the costs of a land survey, which is required depending on where you live. The latter can run for quite a bit.
I don’t know about every states specifications, but rest assured there are other little factors that add to costs as well, and as I said in the beginning, the lender isn’t the only one to blame.