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The Reverse Home Mortgage Process: Loan Origination


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TERMINOLOGY

If you are over the age of 62 and you are interested in a reverse home mortgage, the loan origination fee may be confusing. This is a one-time cost the company that is servicing your loan charges to cover their expense of processing your loan.

Origination Fee

Mortgage origination fees are also known as points. You should make sure your lender does not charge a high origination fee before you close on your reversed mortgage loan. If the fee is high, that will decrease the amount of the proceeds received once the home is settled.

A borrower cannot deduct the origination fee on her income taxes until the fee is paid. With a traditional mortgage, the borrower can deduct the fee as she pays down her loan if the fees were built into the loan principal

With a reverse mortgage, no payments are made until the borrower is deceased or the home is sold. The origination fee cannot be deducted until one of the above occurs. In the case of a death, the person who inherits the property can deduct the fee on his  income taxes once he pays off the reverse mortgage.