Why do many people say that reverse mortgage have high fees?

The fees on a traditional mortgage and a reverse mortgage are actually not too far apart. The difference in upfront cost that many people that account for the difference in fees is the required FHA mortgage insurance premiums. The mortgage insurance for a reverse mortgage is currently 2% for a HECM Standard. There is a new type of reverse mortgage, the HECM Saver, that has a lower initial insurance preimium at only 0.01%. The main difference between a HECM Standard and HECM Saver is that a HECM Standard allows a borrower to borrow more money.

For example, using an example of a $200,000 home with no mortgage for a borrower that is 62 years of age, a HECM Saver would allow a max of $100,644 to be borrowed with the upfront insurance only costing $20 ($200,000 x 0.01%) versus a HECM Standard that would allow a max of $123,464 and insurance costing $4,000 ($200,000 x 2%).