A reverse mortgage loan can provide security for seniors who have sufficient equity in their homes. The funds from a reverse mortgage can be used to supplement retirement income, pay off an existing mortgage1, consolidate debt2, pay for medical or in-home care, make home improvements or repairs, or just contribute to that rainy-day fund.
Since not all reverse mortgage companies provide the same level of service, it is important to choose your lender carefully. Doing a little research when choosing your lender will go a long way to ensure that you are going with the reverse mortgage lender that best fits your needs.
The Better Business Bureau (BBB) is a private, non-profit organization that focuses on providing marketplace trust and has ratings on reverse mortgage companies based on reviews from actual customers. Generally, it helps to choose a reverse mortgage company that is fully accredited by the BBB and holds an A+ rating.
Consumers Affairs is a web-based consumer news and resource center where customers provide feedback and rate their experiences with reverse mortgage companies. When looking for a reverse mortgage company, it’s best to choose one with at least a 4+ star rating.
It is required to be licensed in order to originate a reverse mortgage loan, so the best reverse mortgage companies must be licensed to do business. Company licenses can be verified using the National Multistate Licensing System (NMLS) lookup online at nmlsconsumeraccess.org. Be sure to check for a current license in your specific state before starting an application with a reverse mortgage company.
Do they disclose the costs related to a reverse mortgage? You should know how much they charge for origination fees, closing costs (which can include the appraisal, title search, surveys, inspections, recording fees, mortgage taxes, and credit checks) as well as any other fees or credits.
Do they guarantee their pricing? All lenders will provide a good faith estimate and should not “bait and switch” you from that quote. The best companies will also provide you with an official guarantee for your offer.
How quickly will your loan be closed? When speaking with your loan officer ask them directly how long it should take them to close your loan. Most loans should close within 60 days or less, and you should get that commitment in writing.
What if you have a question? Rates are often similar across different companies as they are based on national market trends. However, customer service absolutely varies. You should find a lender that is committed to providing you with excellent customer service. For example, you should be able to speak to a live person during normal business hours to address any of your questions or concerns throughout the reverse mortgage process. If corresponding via email is more your preference, you should find a lender that prioritizes their technology as part of their service.
If you are interested in speaking with a direct lender, call (800) 976-6211 to speak with a licensed reverse mortgage specialist.
1Your current mortgage, if any, must be paid off using the proceeds from your HECM loan. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
2Your HECM loan will accrue interest that together with principal will have to be repaid when the loan becomes due.