In the Fall lenders offering reverse mortgages or HECMs started funding reverse mortgages with two big differences legislated in the Bush housing bill.
The one most people were concerned about was FHA increasing its its national loan limits up to four hundred seventeen thousand dollars. The other, less known change, was a reduction in lender fees.
Here is how it works; the origination fee is two percent of the value of the home up to $200,000. For values above 200k and up to 417k the fee increases by 1%.
Let's use a $300,000 valued house. The orgination fee for th first $200,000 will be as much as $4,000. For the additional $100,000 in value it can be as much as $1,000. The maximum origination is $5,000.
Prior to the new legislation going into affect a mortgage company could charge two percent up to FHA lending limits.
What concerns me is why the lender is getting the proverbial finger pointed at it. I mean how low can the origination fee be before the lender goes bellie up.
Origination fees are how lenders make money. Don't forget you have to pay all your expenses prior to actually going home at the end of the month with any money in your wallet.
Furthermore, traditional mortgage origination fees are no less expensive if you examine them closely.
Forward mortgages use a standard 1% origination fee. The difference in forward mortgages is known as a service release premium. This is a fee the bank pays the mortgage company for selling a loan at a higher rate.
Reverse mortgage companies make a small percentage of their revenue from the SRP... Many times it's less than $100. That's why the origination is higher.
I have to wonder if AARP has any idea of what goes into mortgage origination and the complexities therein. Are they being real at all.
Afterall, they do have a growing senior population to sell insurance to. Do they ask their client insurance companies to take a hit like they mortgage companies?
Of course not. AARP is far too busy making a killing on all those policies sold through their marketing efforts.
AARP is not so pure and they should to sit this one out.
The one most people were concerned about was FHA increasing its its national loan limits up to four hundred seventeen thousand dollars. The other, less known change, was a reduction in lender fees.
Here is how it works; the origination fee is two percent of the value of the home up to $200,000. For values above 200k and up to 417k the fee increases by 1%.
Let's use a $300,000 valued house. The orgination fee for th first $200,000 will be as much as $4,000. For the additional $100,000 in value it can be as much as $1,000. The maximum origination is $5,000.
Prior to the new legislation going into affect a mortgage company could charge two percent up to FHA lending limits.
What concerns me is why the lender is getting the proverbial finger pointed at it. I mean how low can the origination fee be before the lender goes bellie up.
Origination fees are how lenders make money. Don't forget you have to pay all your expenses prior to actually going home at the end of the month with any money in your wallet.
Furthermore, traditional mortgage origination fees are no less expensive if you examine them closely.
Forward mortgages use a standard 1% origination fee. The difference in forward mortgages is known as a service release premium. This is a fee the bank pays the mortgage company for selling a loan at a higher rate.
Reverse mortgage companies make a small percentage of their revenue from the SRP... Many times it's less than $100. That's why the origination is higher.
I have to wonder if AARP has any idea of what goes into mortgage origination and the complexities therein. Are they being real at all.
Afterall, they do have a growing senior population to sell insurance to. Do they ask their client insurance companies to take a hit like they mortgage companies?
Of course not. AARP is far too busy making a killing on all those policies sold through their marketing efforts.
AARP is not so pure and they should to sit this one out.
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