If you’ve made a decision that a reverse mortgage is right for you, the next step in your journey is to seek out a reverse mortgage lender to complete your loan.
We hope this guide helps you in your search and offer some important tips in narrowing down the right reverse mortgage outfit for you.
Our first advice is to do your homework and check prospective lenders references.
First, Check to See what Past Customers Say About Them
There are a lot of loan officers who were originating a different product just a year ago, have been working for 5 different companies over the past 12 months or their company closes every loan type under the sun and reverse mortgages are a side product or…oh well, you get the idea.
Reverse mortgages are a very specific and specialty-oriented loan program.
If you are not a reverse mortgage specialist, you probably are not aware of all the HUD requirements.
Your originator and the company for whom they work should be ones that specialize in reverse mortgages and close more than just a couple each month along with their other, “regular loans”.
Check online rating agencies where originators cannot manipulate or “buy” ratings.
There are a lot of so-called ratings sites that are not real. They are owned by companies looking to capture your information and sell it to other loan originators and people can pay for positions or rankings on these sites.
IMPORTANT TIP: Choose bona fide consumer sites that lenders and originators cannot flood with their own comments nor can they manipulate the rankings by buying advertising on the site.
Choose sites like Better Business Bureau (BBB) and Google to research possible lenders.
Next Compare, Compare, Compare!
If a lender will not put a proposal in writing to you or will only do so after you supply them with personal information such as your social security number, we recommend you look for a different lender.
Some lenders are afraid to have you compare their pricing and programs to others and try to escape putting anything in writing that you can use to see exactly how they stack up to the competition.
Still others will refuse to do so until you give them your social security number.
A lender does need some information to give you an accurate quote but no more than the month and year of each borrower’s birth (don’t even need the exact birthdate if you do not wish to give it for the initial quote), the zip code where the property is located, the approximate value of the home (which the lender should validate with current sales anyway) and the amount you owe on any current loans/liens on the property.
That is all any lender needs for a quote including eligibility, costs and interest rates.
If you know you have credit issues (especially mortgage, taxes, or insurance delinquencies in the past 24 months you need to let your lender know immediately) but the lender does not need your social security number or need to run your credit for an initial proposal.
Once you have two or three proposals, you can compare all aspects of the loan terms to determine which is right for you and be sure the terms you are comparing are the ones that really count in your circumstances.
Some lenders like to discount a fee such as the appraisal to make it look more attractive but after you compare all other terms, that $100 – $150 you saved on the appraisal fee just cost you thousands or tens of thousands more on other fees and interest!
Do not let any one item blind you to the entire package (and you may be able to get other lenders to offer concessions to overcome that $100 anyway).
Make Sure the Lender is Working for You
The loan is all about you and your needs. The lender should send you the programs and options that you need, not that they want to “sell” you.
A good originator will listen to what you tell them and may suggest different options based on your comments about your goals but in the end, the object should be to line you up with the loan that best meets your needs and goals.
If you feel that no matter what you tell the originator he or she keeps trying to talk you into something that you don’t want, that is not the right lender for you.
Your lender should help make suggestions based on what you tell them are your goals with the loan and why they feel the way they do, but in the end, it is your call.
If your goal is to preserve as much equity as possible and the originator is trying to talk you into taking all the funds from the very first draw, that would be bad advice.
If you want the funds for a specific purpose but the originator is pushing you to take a monthly payment, that isn’t their call.
Borrowers sometimes run into this behavior with counselors as well and that is not their job either.
A counselor should tell you about the loan, how it works, answer any questions you have and let you decide which program best suits your needs – not push their preferences on you. Your loan officer should do the same.
He or she should tell you all about the program, how the different options will affect you and answer your questions but not try to steer you to any specific programs or options unless you ask.
Originators are forbidden by law to give accounting or legal advice so your originator should offer information about the loan but not your taxes, legal implications, or financial planning.
They can tell you about information other borrowers have given them or things they have read, but they must advise you that they cannot tell you how that would work for you and that you should verify with your accountant, attorney or trusted financial advisor.
If you run into a lender who is trying to tell you how to file taxes, financial schemes you should employ with your funds or other such information, it would be our advice to you that you should seek the services of a new loan originator.