HECM loans often provide much greater loan advances than other reverse mortgages. What You Pay The lowest cost reverse mortgages are offered by state and local governments. Private sector reverse mortgages include a variety of costs. An application fee usually includes the cost of an appraisal and a credit report. Other loan costs typically include an origination fee, closing costs, insurance, and a monthly servicing fee.
Interest is charged on all loan advances.
Reverse mortgages are most expensive in the early years of the loan, and then become less costly over time. The cost can be very high in the short term, and is least costly if you live beyond your remaining life expectancy. In many cases, HECM loans are significantly less costly than other reverse mortgages. Consumers considering a private sector reverse mortgage other than a HECM should carefully consider how much greater its cost is likely to be before applying. They can get this information from lenders providing loan comparisons that meet AARP's Model Specifications for Comparing Reverse Mortgages.