Hi Martha,

Thanks for your comment. You are correct. One of the largest fees to obtain a HECM reverse mortgage is the upfront Mortgage Insurance Premium (MIP). Currently, in 2022, that fee is 2% based on the maximum lending limit up to $970,800. So in your case, 2% of $350,000 or $7,000. That fee is a necessary evil. Without it, the HECM reverse mortgage likely wouldn’t exist, or it would exist with much higher rates. The MIP does offer a couple protections for both you and the lender. A HECM is a neg am loan, which means the balance will grow. It is also a non-recourse loan, meaning the home stands on its own. If the balance of the reverse mortgage grows beyond the value of the home, you or your heirs would not be responsible because of the MIP. A less expensive alternative, if you’re in a financial position to make payments, is a HELOC (Home Equity Line of Credit). With a HELOC, you could use your line of credit, for generally 10 years, then it becomes a fully amortizing loan. At any point during your HELOC, your lender could freeze or close your account. This happened a lot around 2007-2008 during the meltdown. With a HECM reverse mortgage, the line of credit can NOT be closed or frozen, no matter what happens to the home’s value.

It’s important to understand the costs and why they exist as well as understanding your alternatives. Hopefully this answered your question about the upfront MIP. If you would like us to provide you a quote, please don’t hesitate to reach out. https://www.mlsreversemortgage.com/free-info-kit/

Let’s hope that if we do have a shutdown, it’s short-lived.