Are you searching for the lowest-cost reverse mortgage?

A few short years ago, people were reading about how expensive reverse mortgages were, but that does not have to be the case currently.  Don’t get me wrong; HUD still charges an Initial Mortgage Insurance Premium based on the home’s value that can run as high as 2% for this one cost alone for the higher draws exceeding 60% of the available Principal Limit.

Depending on the part of the country in which you live, some of the necessary costs like title insurance and state and local fees can still run into the thousands of dollars.  So, what’s the difference now, and how can I call this an “affordable alternative”?…

I’m glad you asked!

ARLO presents affordable costs

Mortgages are valued by lenders based on the initial draw that the borrower takes.

The pricing for lenders at this time is advantageous enough on the higher draws that we can often waive origination fees, give credits to borrowers to help pay their costs, and, in some cases, pay the entire up-front costs of their reverse mortgage (except the counseling fee which HUD will not allow lenders to pay for borrowers).

Most of the loans we are doing currently have no origination fees (many lenders charge up to $6,000 for this fee alone).  This reduces the charges significantly, but since many also contain lender credits, we give the borrower’s money at closing to help pay the other costs.

Some borrowers question me and ask if a lender credit meant we just added the charge onto the loan balance or somewhere else.  The answer to this is no.  If we send you a proposal showing that we are giving you credit to pay costs, that is money we must pay to cover the expenses shown on the estimates.

Even if we give you credit to pay a cost, we must still disclose all costs in a transaction and who is paying it.  So, if a loan has $10,000 in costs, we have to show you all of those costs, even if we give you a $10,000 credit to pay them.

How can we get your costs this low?

Because the pricing is good enough now that, as a direct lender, we can pay costs for borrowers when possible and keep the lights on!  The pricing we receive when we sell loans in the secondary market will not always be enough to pay borrowers’ costs.  And because we receive compensation based on the amount of the loan the borrower draws at closing, we cannot pay costs in all instances.  But when we can, we will.

The bottom line is that borrowers can get a reverse mortgage and save thousands (and sometimes tens of thousands) of dollars now while the pricing is strong for these loans.  We would encourage borrowers who have been on the fence about reverse mortgages or those who decided against it at some time in the past because they thought the initial costs were too high but wish they could get one to take another look now.

It costs nothing to request a proposal, and we don’t believe in badgering borrowers if you’re trying to decide.  The loan must be right for you, and you don’t need us or anyone else constantly calling, emailing, and putting pressure on you to choose or act.  If the loan is right for you and you want to proceed, we’re happy to help.

If you just aren’t sure or you are sure that it’s not suitable for your circumstances, the last thing you need is someone trying to pressure you to do something you don’t want to do.  So, if you would like to see if a low or no closing cost reverse mortgage is possible, please let us know, and we will be happy to send you a proposal.

Closing Cost FAQs


What are the typical closing costs for a reverse mortgage?

The typical closing costs for a reverse mortgage loan will vary from state to state.  For the FHA-insured HECM (Home Equity Conversion Mortgage), the mortgage insurance charged is 2% of the Property Value or Maximum Claim Amount ($1,149,825 for 2024), whichever is less.  Origination Fees are capped at $6,000.  All other fees for Appraisal, Title Insurance, Recording, etc., will depend on the state you live in and the value of your home.  You must obtain a proposal from a reverse mortgage lender to determine these various costs.

What is the least expensive reverse mortgage?

Regarding closing costs, Proprietary or Jumbo Reverse Mortgages usually have the lowest closing costs because HUD does not insure them and, therefore, does not have the 2% mortgage insurance charge.  However, there are instances where costs can be reduced on the HECM program via a lender credit depending on the interest rate and other factors.  To determine the lowest cost option for your scenario, you must obtain a proposal from a reverse mortgage lender.

Are closing costs on a reverse mortgage deductible?

As a reverse mortgage lender, we cannot provide tax advice as we do not have the required licensing.  We recommend that all customers seek guidance from their trusted tax professionals.

What is the current interest rate for a reverse mortgage?

The interest rates for a reverse mortgage are subject to change regularly as they are with traditional loans.  Many rate options and product types exist, including fixed and adjustable rates.  You would need a proposal from a reverse mortgage lender to get a quote of the current rate options available.

What is the maximum origination fee for a reverse mortgage?

The maximum origination fee for a reverse mortgage depends on your home value and the product you are going with.  On the HECM (Home Equity Conversion Mortgage), the formula is 2% of the first $200,000 in property value and 1% of every dollar after up to a ceiling of $6,000.  For a Proprietary or Jumbo Reverse Mortgage, the Origination Fee cap as of December 2020 is $10,000 for Line of Credit Products and as high as 2% of your loan amount on specific Fixed Rate options.

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