Fees, Costs and Payments at Origination

Origination occurs when the lender qualifies the borrower to get the loan, appraises the home, processes all the necessary documents and advances the money to the borrower. The fees, costs and payments which a lender may charge when the loan is originated are:

• Loan origination fee
• Document preparation and ‘recording’ the loan
• Appraisal or survey of the property
• Title and tax search
• Attorney’s fees charged to the lender in connection with the closing of the loan
• Credit report
• Flood zone search
• Inspection fee
• Annuity purchase payment
• Repairs contracted for, at or before the loan closing
• Tax reporting service (a one time fee)
• Mortgage insurance
• Real estate taxes and property insurance
• Mortgage brokerage services (not to exceed three points based on the value of the property)

Fees, Costs and Payments During the Life of the Loan

While the reverse mortgage is outstanding there are a few, limited additional fees and costs that the lender can charge you. The lender can ask that you pay these directly or add them to your loan balance. The only fees, costs and payments which a lender may charge during the loan are:

• The cost of additional mortgage insurance
• The cost to maintain the structural integrity of the home
• The cost of any appraisal for the refinancing or extension of the loan
• The cost of real estate taxes and property insurance
• A monthly servicing fee of not more than $30.00

In exchange for a lower interest rate the lender and the borrower may agree to “shared appreciation” or “equity participation.” Participation mortgages are so named because the lender “participates,” or has the right to a share in any increase in the value of your home as well as the interest on the loan.

A Shared Appreciation Mortgage (SAM) takes into account the appreciation in value of the house between the time the loan is signed and the end of the loan term. The lender receives an agreed-to percentage of the appreciated value of the loan when the loan is terminated.