## How Reverse Mortgage Lenders Make Money
Reverse mortgage lenders make money by charging a variety of fees, including origination fees, mortgage insurance premiums, and servicing fees. These fees are typically added to the loan balance and paid off over time, so the lender earns interest on them as well as the principal balance of the loan.
### Origination Fees
Origination fees are charged by the lender to cover the costs of processing and underwriting the loan. These fees can range from 2% to 5% of the loan amount, and they are typically paid upfront at closing.
### Mortgage Insurance Premiums
Mortgage insurance premiums are charged by the lender to protect themselves in the event that the borrower defaults on the loan. These premiums are typically paid monthly, and they can range from 0.5% to 1% of the loan balance.
### Servicing Fees
Servicing fees are charged by the lender to cover the costs of administering the loan. These fees can range from 0.25% to 0.5% of the loan balance, and they are typically paid monthly.
In addition to these fees, reverse mortgage lenders may also make money by selling the mortgage to a third party. This can be done at any time after the loan is originated, and it allows the lender to recoup some of the money that they have invested in the loan.
### How to Choose a Reverse Mortgage Lender
When choosing a reverse mortgage lender, it is important to compare the fees that they charge. You should also consider the lender’s reputation and experience. It is important to work with a lender that you trust and that has a proven track record of providing quality service.
Here are some tips for choosing a reverse mortgage lender:
* **Get referrals from friends or family members.**
* **Read online reviews of different lenders.**
* **Compare the fees and interest rates that different lenders offer.**
* **Ask the lender about their experience and track record.**
* **Make sure that the lender is licensed and bonded.**
### Conclusion
Reverse mortgages can be a helpful financial tool for seniors who need to access the equity in their homes. However, it is important to understand how reverse mortgage lenders make money before you take out a loan. By comparing the fees and interest rates that different lenders offer, you can find the best deal on a reverse mortgage.