Watch that Service Fee
Most people do not pay much attention to the service fee in a reverse mortgage. This is a fee that varies by lender between $25 and $35. Big mistake.
In calculating the Net Principal Limit (The money coming to you or being placed in your credit account), there is a large chunk of money called the “service fee set aside”. Since the government has designed the reverse mortgage so that you will not have to pull out your checkbook to pay any monthly payments on the reverse mortgage, the service fee set aside is a lump sum that takes care of those monthly payments for you.
The service fee set aside is an interest bearing account that is set up to pay service fees until you reach the age of 100. Depending on your age and the monthly fee, this can range from a few thousand to 7 or 8 thousand dollars. These dollars are taken from the net principal limit to you or your credit line dollar for dollar.
So make sure you negotiate the $25 service fee.
Enjoy the extra few thousand dollars.
Bob
bob@az62.com
www.az62.com
623-214-6663
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