What to look out for when shopping for a reverse mortgage lender.
You’ve worked so hard for your retirement, and it should be a time of enjoyment and peace of mind. If you have significant equity in your home, a reverse mortgage can help support you.
Choosing the right lender to support you through getting your reverse mortgage is an important part of the process. With so many options available, the search can seem intimidating, so let us help you learn what to look for to ensure you get the best terms and overall experience.
Let’s walk through the key factors to consider when selecting a reverse mortgage lender.
A reverse mortgage is a type of home loan available to homeowners aged 62 and older that allows them to convert part of their home equity into cash. Unlike traditional loans, there are no monthly mortgage payments required—the loan is repaid when the homeowner sells the home, moves out, or passes away.
Choosing to support yourself in retirement by accessing a reverse mortgage is a very important decision, and it’s necessary that you have the right team beside you along the way. An important part of that team is the lender you use to obtain your reverse mortgage.
Not all reverse mortgage lenders are the same. Interest rates, fees, loan terms, and customer service can vary significantly from lender to lender. Take the time to comparison shop by interviewing a few different lenders to ensure that you get the best deal while feeling comfortable and supported throughout from start to finish.
As consumers, we often don’t realize how crucial customer service is until we are deeply involved in the process of working with someone. Look for these traits in a lender before diving into the details with them:
There isn’t only one type of reverse mortgage loan. You have a baseline understanding of each type, but your lender should also be able to offer a range of options so you have access to the option that fits you.
Shopping for a lender doesn’t have to be confusing. Follow the steps below for guidance on finding the right options that are more likely to meet the criteria outlined above.
You can find a lot of good options for lenders by using HUD’s search tool research lenders who fit the criteria above https://www.hud.gov/program_offices/housing/sfh/lender/lenderlist.
Asking for referrals is always a good way to find quality service providers. Family and friends can provide good options and make sure to ask your financial advisor and reverse mortgage counselor as well.
Public forums like Reddit and Facebook groups can also be a resource for information and referrals.
Compare rates, fees, and terms from at least three lenders. Looking over these estimates will let you know who will give you the best deal and will help you get more familiar with the numbers you will be reading as you go through the process.
Pay attention to closing costs, the Annual Percentage Rate (APR), and the long-term financial impact that this type of loan could have on your equity and your future.
There is no bad question when it comes to the state of your financial future, so ask any question that you think of. Here area few essentials to start with:
Reminder: If your lender makes you feel like you shouldn’t be asking questions, that is a red flag.
High-Pressure Sales Tactics. Be cautious of any lenders who tryto rush you into making a decision and avoid companies that use aggressivetactics to push you into choosing a loan.
Lack of Transparency. If a lender is unwilling to provide clear, writtendocumentation of all costs and terms, walk away.
Upfront Payment Demands. Legitimate reverse mortgagelenders do not require large upfront fees before loan approval.
Unlicensed Lenders. Verify that your lender is properly licensed inyour state and follows HUD and FHA regulations.
Negative Reviews. Look for any complaints about high fees, poor service, deceptive practices or anything else that seems concerning. One bad review may not be grounds for dismissal of a lender option, but if there’s more than one, be wary.
Reverse mortgages pose risks beyond losing homeownership, including eroding home equity, accruing high fees, and limiting inheritance. Interest compounds, potentially leading to significant debt. Borrowers must maintain taxes and insurance or risk foreclosure. Consider these factors carefully.
After getting multiple loan estimates from referrals and other lenders that meet the quality standards listed above, compare each lender’s interest rates, fees, and any other requirements that come with the loan terms that they are offering.
Consider the quality of customer support that you have received so far in the process. Sometimes, slightly higher fees may be worth itfor a better experience overall.
The lender that you choose should be committed to helpingyou achieve financial stability in retirement and prioritize education oversales.
Always consult with your financial planner, close familymembers, and/or a HUD-certified housing counselor before finalizing yourchoice.
Choosing the right reverse mortgage lender is a critical step insecuring your financial future. By conducting thorough research, comparingmultiple lenders, and watching out for red flags, you can make an informeddecision that will benefit you for years to come.
If you’re ready to explore your options, take the nextstep by consulting with a trusted reverse mortgage expert with the ReverseMortgage Academy. Don’t settle for anything less than transparency,integrity, and top-tier customer service.
Need help navigating your reverse mortgage options?Contact [Your Company] today for expert guidance tailored to your needs.
