Below are some frequently asked questions and answers about reverse mortgage rates and fees. In addition to these FAQ’s, we have questions and answers focusing on other reverse mortgage topics:

Reverse Mortgage Basics

Reverse Mortgages and Taxes

Reverse Mortgage Counseling

Questions From Visitors

If you have questions about reverse mortgages not included here, you can use the form at the bottom to submit it! We’ll do our best to get you a prompt and accurate reply.

1. What interest rate will I pay for this loan?
2. What costs are associated with taking out a reverse mortgage?
3. Can I lock-in a the interest rate on a reverse mortgage to protect against rate increases?
4. Is it true that once you have decided to get a HECM with either a monthly or annually adjusting interest rate, you cannot change your decision?

Reverse Mortgage Rates and Fees Questions and Answers

1. What interest rate will I pay for this loan?

   All major reverse mortgage programs have adjustable rates that are tied to a specific index. It is important to realize that, unlike traditional mortgages, there is no interest rate competition between lenders for the same type of reverse mortgage. Click here to see current rates for major reverse mortgage programs.

2. What costs are associated with taking out a reverse mortgage?

   Following are costs typically associated with a Home Equity Converion Mortgage (HECM) - the most popular type of reverse mortgage. Most other reverse mortgage programs have similar fee structures:

   • Origination Fee - $2,000 or 2% of the “maximum claim amount” (basically home value).
   • Mortgage Insurance - initial insurance fee is 2% of home value or FHA 203b limit, whichever is lower. Also, a recurring premium equal to 1/2 of 1 percent (0.5%) of the outstanding loan balance is charged annually for mortgage insurance over the life of the loan.
   • Closing Costs - Appraisal, floodplain certification, title search, title insurance, recording fees, state or local taxes, attorney fees, etc. Expect these costs to total $2,000 - $3,000.
   • Service Set Aside - expect to pay $30 - $35 per month to cover costs associated with servicing the loan (i.e. statement preparation, loan payments, etc.).

   Most of these fees can be paid either in cash at closing or financed as part of the loan balance. Of course, if fees are financed, you will pay interest on them.

3. Can I lock-in a the interest rate on a reverse mortgage to protect against rate increases?

   On a HECM loan - the most popular type of reverse mortgage - the “initial” rate that determines how much you can borrow can be locked in for 120 days after the date of application. However, the “current” rate, which determines the total interest ultimately paid on the loan is a rate that changes (either monthly or annually) and cannot be locked in.

4. Is it true that once you have decided to get a HECM with either a monthly or annually adjusting interest rate, you cannot change your decision?

   True. Selection of the rate adjustment period is a one-time, irrevocable decision.