There are also appraisal fees, which vary by region but average around $450. If the appraiser determines that your house requires repairs, you will be required to complete the repairs as a condition of approval, as well.
Finally, there are closing costs, which are comparable to those of any mortgage loan and often amount to about $1,000. Some lenders will also charge a $35 monthly service fee for the life of the loan, but most have dropped that fee, according to Trawinski.
"These loans can be expensive," she said, noting it all depends upon how much you borrow initially. "If you take out a lot of money upfront and exit the home in a very short period of time, it can be a very expensive way to borrow money.
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"But if you borrow less and stay longer, the costs amortize over time, so it's comparatively less costly," she added.
Reverse mortgage loans come in three flavors: single-purpose reverse mortgages, which are offered by some states, local government agencies and nonprofit organizations; federally-insured reverse mortgages (HECMs); and proprietary reverse mortgages, which are private loans backed by the companies that develop them.
According to the Federal Trade Commission, single-purpose reverse mortgages are the least expensive option, but they're not available everywhere and can be used for only one purpose, which is specified by the lender. The lender might indicate, for example, that the money can only be used to pay for home repairs, improvements or property taxes.