If my house is worth $100,000 how much will I REALLY get?

If my house is worth $100,000 and the calculator says I can get $61,000 out of it with a HECM, for instance, will I get a check for that much?

The short answer to your question is that my best guess is $47,483.

The long answer to this question:

There will be closing costs, “set asides”, a loan origination fee, and a mortgage insurance premium. There will likely be a year’s worth of house insurance collected
at closing, and possibly a year’s worth of property taxes. If you need
repairs on your home, those will be completed and the money to pay for those will be held back at closing. (Working with a local reverse mortgage loan officer can make repairs less painful and time consuming. Obviously, being nearby they can help you with lining up contractors and making sure you will be working within the lender's policy on contractors and repairs.)

Here is a typical list of those types of expenses and pre-payments subtracted from the amount you expect to receive at closing if you were born in 1933 and your house was worth
$100,000. (This is by no means meant to be all inclusive! This is just an example off the top of my head.)

Title insurance $1,100.00

Title endorsements $115.00

Escrow fee $500.00

Surveyor $500.00

Termite Inspector $250.00

Appraiser Fee $350.00*

General Inspector $250.00

Mortgage Insurance Premium $2,000.00

Loan Origination Fee $2,000.00

Set Asides $5,000.00

House Insurance $700.00

Recording Fees $200.00

Courier Fee $25.00

Tax Certificate $10.00

Flood Certificate $25.00

Total: $13,017.00

Now, subtract $13,017.00 from $61,000 and you get a clearer picture of
what you will be receiving if you choose to take the entire lump sum…around
$47,483.

*Appraisal Fee Regarding the $350.00 to the appraiser--this is usually paid at the time the application for the reverse mortgage is taken. If this is the case it will not be
subtracted at closing.

What are “set asides”? Set asides are amounts set aside to have the loan serviced each month. The amount is generally calculated on $35.00 a month for a certain amount of months. The money is there to be taken away from the available funds each month to pay for loan servicing.

What is servicing? In all loans through lenders there is a servicing amount which the loan costs the lender each month. In a traditional loan, in part the interest portion of the loan payment is used for servicing. Since you never pay a payment on a reverse mortgage you
have to set it aside to pay for servicing over the life of the loan.

Wow, that Mortgage Insurance Premium is sure high! Do I have to ever pay that again? What’s that for anyway?

No, the Mortgage Insurance Premium is only paid once. Yes, it does seem high, but what you get for it makes it worth it. You can read an in depth explanation here.

Title Insurance? Do I have to ever pay that again? What’s that for
anyway?

No, you will only pay this once. The title insurance lets the lender know that no other person or entity has any interest in your home and that you have a clear title to it. Title searches to assure clear title are done by people called abstractors; part of the costs involved in the title fees pay for abstractors to go to the courthouse and follow the chain of title on your property making sure that you are the only title holder.