I hear so many negative comments about reverse mortgages. From “the bank will take your house” to “they are very costly and expensive.” Here is the real scoop about where all of those “high costs” come from.
I’ll start by saying that I got a reverse mortgage from one of the larger companies providing them. I was met by a sweet lady who seemed so trustworthy and nice. She explained all the costs and said that these were just the fees and costs associated with the loan. I believed her. I was paying FHA mortgage insurance, all of the title and closing fees, as well as processing and origination fees to the lender (another $6k or so). All in all, it was about $20,000 in costs and fees. YES, this is a high cost loan.
About a week before it was supposed to close, I decided to look into all of the fees and costs as well as where the lender was making their money. I have been in the lending and construction business for over 30 years and have to say, I should have been more suspicious right from the beginning.
What I found out was that the lender was going to make nearly $38,000 in profits on my loan! I threatened to cancel if they didn’t pay all of my fees (which they did of course, because they still made good money).
What came of this experience was me bringing North Point Financial back into being so that I could provide reverse mortgages to other seniors and do it at a more reasonable cost. North Point Financial is licensed with the NMLS (985055 and 974889) as well as the Cal Dept. of Real Estate (00662853). We are a wholesale broker for one of the major reverse mortgage lenders in the country. Reverse mortgages are what we do.
I think that reverse mortgages are a great avenue for many seniors.
We at North Point Financial pay nearly all of the fees out of our wholesale commissions -not by adding them to the loan balance! If you go to our website, you can view a HUD closing statement that shows broker credits paying most of the costs. The total closing costs to the borrower on the loan was only $291. That is it!
In this case, the borrower chose a loan scenario which allowed us to credit about $8000 to their closing costs, resulting with only $291 due from the borrower. We paid the Mortgage insurance, title and escrow costs etc. These closing costs were NOT added to the loan balance. The accumulating interest for the chosen loan scenario is part of the cost of the loan, but occurs after closing.
Although this scenario may not be typical to the industry, we at North Point Financial strive to provide similar credits to our customers if the loan scenario provides.
Cliff Johnsen
CLIFF JOHNSEN TALKS REVERSE MORTGAGES 