“Reverse mortgage” is a term we seem to hear more of today. Created for senior adults aged 62 and older, a reverse mortgage (also known as a Home Equity Conversion Mortgage) allows a homeowner to cash out a portion of the equity in their home. Depending upon the loan type, borrowers can elect to receive their funds every month or in a lump sum. The amount received depends upon factors that include the age of the homeowner(s), the appraisal value of the home, and current interest rates.
The Title Process for a Reverse Mortgage
Closing on a reverse mortgage varies a bit from traditional real estate settlement. In place of the Closing Disclosure (CD) Form, a HUD Settlement Statement is used to itemize fees and other details pertinent to this loan. Mortgage Insurance Premium (MIP) is 2% of the home’s appraisal value or FHA lending limit ($679,650), whichever is less. The servicing fee set aside is processed during the closing, deducted from the loan’s proceeds, and used to cover anticipated costs of servicing the loan throughout amortization. The remaining closing fees are generally comparable to those standards to any other type of mortgage and vary by lender; however, additional costs and documentation may also apply.
This information is meant to provide a general overview of reverse mortgages and closing on this type of loan.
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