Is the Reverse Mortgage expensive?
Interestingly, no. At least compared to the most common conventional mortgage in America today, a regular FHA Mortgage. We share the same initial costs such as Mortgage Insurance, Origination Fee, Appraisal, Title Insurance, Credit Report, etc… but… the FHA Reverse Mortgage does have one additional fee: HUD Counseling (typically $120 to $150).
You see, one of the many safety features that HUD has built into the modern Reverse Mortgage is that no one can move forward with originating their Reverse Mortgage without having completed a counseling session with a HUD trained counselor, usually over the phone. Required for the borrowers but also open to the children, family member or trusted advisor if desired. The counseling will first confirm that the interest rates, fees and costs are correct for the program and that you understand the process and what your alternatives are. Once completed you get a “diploma” that allows you to move forward with the application. But, doing the counseling does not in any way commit you to do a Reverse Mortgage.