Reverse Question

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dc62

279 Posts

Posted - 05/26/2008 : 6:19:31 PM

I'm told that on a standard FHA reverse mortgage, everyone has to charge 2 points on the max loan amount. Is this true? Why would this product be different than any other mortgage product, where lenders and brokers price in a competitive market?

989 Posts

Posted - 05/26/2008 : 8:22:30 PM

The maximum that the lender may charge is 2% on a HECM. The lender may charge less if they choose to do so.

rmcinturff

371 Posts

Posted - 05/27/2008 : 08:08:02 AM

The 2% is charged on the lesser of the county lending limit or the home value for the FHA HECM.

For jumbos there are some differences, but most charge 2% on the principle lending limit, which is always less than the home value. I think that's what you are referring to when you say max loan amount.

BofA had a program at .5% and 1% of the principle limit but with different margins.

dc62

279 Posts

Posted - 05/27/2008 : 08:43:14 AM

My parents are looking to do a reverse mortgage and I want to make certain that they're not overpaying, hence my question. So there are lenders/brokers out there willing to take less than 2 points, right?

CoolMtgGuy

3704 Posts

Posted - 05/27/2008 : 08:49:59 AM

quote:
Originally posted by dc62

My parents are looking to do a reverse mortgage and I want to make certain that they're not overpaying, hence my question. So there are lenders/brokers out there willing to take less than 2 points, right?

Select a broker/lender that you know or are familiar with. Have them do the analysis and produce a document that shows all the numbers, including the fees being paid to the broker/lender. Review it yourself and determine if it is a fair offer or not.

Fishing here for a more definitive answer than you can arrange for yoursself will likely get you the answers your parents deserve. Also, there are different types of reverse mortgage products/programs. The HECM mentioned above is only one of them. Investigate all of the others through the exercise I suggest.

dc62

279 Posts

Posted - 05/27/2008 : 08:58:05 AM

quote:
Originally posted by CoolMtgGuy

quote:
Originally posted by dc62

My parents are looking to do a reverse mortgage and I want to make certain that they're not overpaying, hence my question. So there are lenders/brokers out there willing to take less than 2 points, right?

Select a broker/lender that you know or are familiar with. Have them do the analysis and produce a document that shows all the numbers, including the fees being paid to the broker/lender. Review it yourself and determine if it is a fair offer or not.

Fishing here for a more definitive answer than you can arrange for yoursself will likely get you the answers your parents deserve. Also, there are different types of reverse mortgage products/programs. The HECM mentioned above is only one of them. Investigate all of the others through the exercise I suggest.

I've done most of what you suggest; what I'm hearing from those I've spoken with is that it's unlikely that I'll get someone to do this for less than 2 points, which is really the only question I'm trying to get answered here - is this a competitive arena, or are the origination fees essentially locked in through FHA.

StayInHomeGuy

281 Posts

Posted - 05/27/2008 : 09:34:39 AM

quote:
Originally posted by dc62

quote:
Originally posted by CoolMtgGuy

quote:
Originally posted by dc62

My parents are looking to do a reverse mortgage and I want to make certain that they're not overpaying, hence my question. So there are lenders/brokers out there willing to take less than 2 points, right?

Select a broker/lender that you know or are familiar with. Have them do the analysis and produce a document that shows all the numbers, including the fees being paid to the broker/lender. Review it yourself and determine if it is a fair offer or not.

Fishing here for a more definitive answer than you can arrange for yoursself will likely get you the answers your parents deserve. Also, there are different types of reverse mortgage products/programs. The HECM mentioned above is only one of them. Investigate all of the others through the exercise I suggest.

I've done most of what you suggest; what I'm hearing from those I've spoken with is that it's unlikely that I'll get someone to do this for less than 2 points, which is really the only question I'm trying to get answered here - is this a competitive arena, or are the origination fees essentially locked in through FHA.

There are not locked, we can drop the origination if we chose to do so, it's 2% MAX. We have very little control over the interest rates however so as far as being a "competitive arena" the only factor really is that origination fee.

rainmand

3837 Posts

Posted - 05/27/2008 : 11:26:39 AM

There's two fees you should be looking at Don, the Origination Fee and the Monthly Service Fee. Both fees affect how much money your parents will receive. HUD says 2% is the most a Lender can charge, and $2,000 is the least. A $35 service fee is the most that can be charged and $25 is the least. Reducing both fees can result in a savings of approximately $7,000 to your parents, depending on their ages. Look for a local Reverse Mortgage Specialist that'll charge you the lowest fees for your parents in exchange for you referring future business to them via the HECM Advisor program. That way you'll both benefit. I'll price it out for you if you'd like.

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