What are the costs in getting a Reverse Mortgage?
HUD’s Reverse Mortgage (HECM) has become so popular that many large reverse mortgage lenders have come up with their own version in addition to the HECM. The one we market is Bank of America’s. It is called The Independence Plan (IP). It was designed specifically for homes valued over $500,000 since the HECM is aimed primarily at homes valued at less than $500,000. With the IP, the up-front costs are low, generally $6,500 and depending on how much you draw out at closing, can be as little as $500. However, the initial interest rate is higher than the HECM’s. With the HECM, the up-front costs are higher but the initial rate is lower. The main reason HUD’s costs are more up-front is because they require mortgage insurance of 2.5%. The Independence Plan (IP) does not. Both plans have a small monthly service fee to prepare and send out monthly statements (in a conventional mortgage this fee is paid through an increase in the interest rate), a Loan Origination Fee and about $2,000 in standa
