Reverse Mortgage Refinance Costs Explained

Common Refinance Closing Costs

When you initiate a refinance, you will encounter several standard fees. Fortunately, FHA regulations cap certain costs to protect borrowers.

• Origination Fee: This is the fee charged by the lender for processing the loan. The FHA legally caps this fee based on the value of your home, with a strict maximum limit.
• Appraisal Fee: Because the lender needs to verify your home's current market value to calculate your new principal limit, an independent FHA appraisal is required.
• Third-Party Fees: This includes title search, title insurance, recording fees, and credit checks.

Initial Mortgage Insurance Premium (IMIP)

Every HECM requires an upfront mortgage insurance premium paid to the FHA. However, when refinancing, you may not have to pay the full premium again. The FHA often credits the IMIP you paid on your original loan, meaning you only pay the premium on the difference between your old home value and your new home value.

Lender Credits

In some cases, lenders may offer credits to offset your closing costs, usually in exchange for a slightly higher interest rate. You can model how lender credits impact your bottom line using our reverse mortgage refinance calculator to ensure the trade-off makes financial sense.