HECM

The upfront cost of a HECM (Home Equity Conversion Mortgage) can vary depending on your home's value, the amount you borrow, and the lender. Typical costs include: Upfront Mortgage Insurance Premium (MIP): Generally 2% of the home's appraised value (up to the FHA lending limit). Example: If your home is worth $400,000, the upfront MIP would be about $8,000. Origination fee: Lenders may charge up to: 2% of the first $200,000 of the home's value, plus 1% of the amount above $200,000, Subject to FHA limits (minimum $2,500, maximum $6,000). Third-party closing costs: These may include: Home appraisal Title search and title insurance Recording fees Credit report Attorney or settlement fees (where applicable) These often total $2,000–$5,000, depending on your location. Counseling fee: Before getting a HECM, you must complete counseling with a HUD-approved counselor. There is usually a modest fee, though some agencies offer it at no cost or on a sliding scale. Do you have to pay these costs out of pocket? Usually no. Most borrowers choose to finance the upfront costs into the reverse mortgage, so they are added to the loan balance rather than paid at closing. However, because those costs become part of the loan, interest accrues on them as well. If you tell me: approximately how much your home is worth, and whether you still owe money on your current mortgage, I can estimate: your total upfront costs, how much you might be able to borrow, and how much equity you would likely have remaining.