Page 6 - Best Mortgage Reverse_Mortgage_Truth_Neat

balance. We have done loans like that for our clients at Best Mortgage. They got a new loan to
pay off the existing reverse mortgage balance and bought out their siblings’ share of the equity

in the home.

So stories about heirs being stuck with big bills to pay off the reverse mortgage on their
parents’ home are not true in the case of FHA HECM loans, which is the only type of reverse
mortgage that we offer at Best Mortgage. There were some private money reverse mortgage
programs in the past 10‐20 years that had different rules, and many of the “horror stories” you

hear or read about in the news are related to those private money reverse mortgage loans and
incompetent and/or unethical loan officers.

Again, this is another reason why it’s important to work with a LOCAL reverse mortgage expert
like Best Mortgage where you are working with the owner of the company and not a hired loan

officer.

But what about this scary headline?

• Crazy High Loan Fees!

In the past, there were privately funded reverse mortgage programs that did in fact have pretty
high loan fees attached to them. But the loan origination fees on an FHA HECM reverse
mortgage are strictly regulated by the federal government (HUD). The loan origination fee is
limited to $2,500 to $6,000 depending on the size of the loan. $6,000 is the maximum loan
origination fee legally allowed on a reverse mortgage. By comparison, there is no maximum
origination fee limit on standard FHA loans often used by first‐time home buyers.

The “closing costs” for an FHA HECM loan are about the same as for a standard FHA or
“conventional” (Fannie Mae) mortgage and typically total approximately $3,000.

The other cost associated with a FHA HECM reverse mortgage is the Up Front Mortgage

Insurance Premium (UFMIP). This is the government insurance that is used to protect the
banks from losses if there is insufficient equity to pay off the balance of the reverse mortgage
for whatever reason. If you currently owe little or no mortgage balance on your home, you
would pay a UFMIP rate of only 0.5% of the appraised value of your home (up to a maximum of
$625,000 home value). That’s far less than that 1.75% UFMIP rate that homebuyers pay for
standard FHA purchase loan to buy a home. If your current mortgage balance is equal to
approximately 35% to 45% or more of your home’s appraised value (depending on your age)

Reverse Mortgage Truth Report ©Best Mortgage Inc. (425) 649‐6000 Page 6