How Do I Choose A Lender
Choosing a reverse mortgage lender is a critically important step. Homeowners should consider contacting and interviewing several lenders before deciding who they wish to work with, good lenders will understand and respect your comparison shopping and will be prepared to work to win your business.
Things to consider when selecting a reverse mortgage lender.
- Rates and fess: Closing costs, and monthly serving fees are limited by government
regulation, however this sets a maximum level and not all lenders charge the maximum
fee allowed. Even more importantly the differences in the interest rate, even small
ones, can significantly effect the both the total cost of the loan and the amount of
loan proceeds the borrower can access Although the rates and fees are not the only
thing to be considered, it is worth checking to make sure you are getting the best deal you can.
- Lender Expertise: Being a great reverse mortgage lender usually involves much more
than simply selling a product. The lender you work with should be willing and able to
discuss the details of how each loan option works and be prepared to ensure that you
are completely comfortable with your decision. If a lender you speak with is unwilling
or unable to answer your questions, its worth looking around to find another who will.
- Lender Ethics: Most lenders work on commission, and even if they don't, their organizations still
only make money when they originate a loan. However, a good reverse mortgage lender will want to make sure that
they fully understand your personal financial situation. In this way lenders can help suggest what loan features
might work best for you and in some cases may suggest you delay making a discussion on whether to take out a
reverse mortgage until you have explored other options.
- Warning signs: Sadly, there are individuals who do not live up the the best ethical
standards that you should expect from a lender. Warning signs include:
- Exaggerated or misleading Promises: A Reverse Mortgage is not "free income
for life" or a "free benefit program" any lender making a claim like this should be avoided.
- Attempts to sell other financial products or investments (insurance annuities etc.)
with the proceeds of the reverse mortgage are another warning sign. Many of these services
are not in the best interests of the homeowner but do generate a hefty commission for
the salesman. Claims any product must be purchased in order to get the reverse mortgage
are untrue.
- Hard sell and vague general reassurances: Homeowners should be wary of any lender
who attempts to pressure a home owner into making a decision quickly, or before they
fully understand what they are getting into.
- Exaggerated or misleading Promises: A Reverse Mortgage is not "free income
for life" or a "free benefit program" any lender making a claim like this should be avoided.
- Where to Start:
- The U.S. Department of Housing and Urban Development maintains a list of
all Lender eligible to make reverse mortgages here,
http://www.hud.gov/ll/code/llslcrit.cfm
- National Association of Reverse Mortgage Lenders Association (NRMLA) maintains a list
of its Members who have voluntarily agreed to abide by a professional code of
conduct here.
http://www.reversemortgage.org/Default.aspx?tabid=255
- The U.S. Department of Housing and Urban Development maintains a list of
all Lender eligible to make reverse mortgages here,
http://www.hud.gov/ll/code/llslcrit.cfm