Reverse Mortgage Lenders Cut Loan Fees

One of the main reverse mortgage disadvantages we covered last year was the high upfront cost charged by lenders.  Although they’re not doing away with them altogether, companies like Genworth Financial, Bank of America, Wells Fargo, and MetLife are reducing their origination or servicing fees on reverse mortgages according to the Wall Street Journal.

Reverse Mortgage Disadvantages & Benefits

Many people have mixed feelings about reverse mortgages.  Although they offer a way for a person or couple on a fixed income to tap into a big chunk of their home equity there are downsides as well.  For example, reverse mortgages restrict your options to move and also can deplete the value of an estate that can be left to children, grandchildren, or other family members.

Reverse Mortgage Fee Cuts

Reverse mortgages certainly aren’t for everyone but if you or someone in your family has decided to research them as an option be sure to compare the costs from different lenders because the recent fee adjustments could save you thousands of dollars.

For example, the WSJ article looks at an example where the origination fee and monthly servicing fee were dropped, saving the borrower almost $11,000.  The biggest fee, HUD insurance (required by Department of Housing and Development) is still part of the loan costs.  As lenders compete to gain the business of baby boomers wanting to access the equity in their homes, the fees could continue to drop, so make sure you shop around for the best deal.

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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