What is important to know is that no matter where you live the closing costs for reverse mortgages will be pretty high.

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.

So, who do we blame when there is no one else to blame? Mostly people like to point their fingers at the mortgage company. Those greedy pigs.

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

A closing document called the Good Faith Estimate of Costs separates and shows all of the closing costs, one of which is the origination fee. It is the sole fee from the bank.

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

The largest fee, typically, is the FHA mortgage insurance premium. FHA charges two percent of the value of the home up to $417,000.

At the highest value of $417,000 FHA can charge over eight thousand dollars in mortgage insurance. The lender can only charge up to $6,000.

Did I mention this is new law? For some reason the Feds don’t mind telling the lender the highest amount they can bill, all the while leaving themselves without a cap.

(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.

The appraisal will be listed here as well, along with the costs of a land survey, which is required depending on where you live. The latter can run for quite a bit.

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.