Something to remember: the costs of concluding a reverse mortgage will be lofty. It doesn't make a difference where you reside.



Usually, closing costs are around five percent of the home value, however if the house is considered on the low end in terms of worth, it could be up to 10%.

This can hit some borrowers hard when it takes them by surprise. Many times they consider the harshness of the transaction the loan company's fault.

It's the bank's fault that the costs are so high. Right? Well, I wouldn't say the bank isn't a part of the whole equation, but it's not the whole equation.

About 7 separate entities make up the entire closing process, the Federal government being one of these.

If you look at what is known as a Good Faith Estimate of Costs, you will notice a litany of fees. Only one of these fees is charged by the actual lender. It is known as an origination fee.

Don't get me wrong, the origination fee is still substantial. But it is not the majority of the cost.

Of all closing costs HUD charges the most of any company for homes valued between $100,000 and $417,000. They charge an insurance fee of two percent of value.

At the most FHA can charge $8340. The highest the origination fee can be is $6,000.

This new law makes me laugh. The lender is told to what extent he can profit, while the government has no restriction on what they make.

(Incidentally, if you were called to give money to a campaign as of late and thought you were on the list of people not to call, the legislators happily exempted themselves from that law.)

Back to costs. The title or escrow company takes a big chunk of the costs as well, between title insurance, additional binders, and their fee for conducting the transaction.

Then don't forget the appraisal fee for a formal valuation. In some states you have to get the land surveyed as well. That aint cheap.

I can't speak from states outside of Texas. I wouldn't be surprised if borrowers are on the hook for other expensive little goodies there not mentioned here. Just remember the bank is not always the culprit.