How Reverse Mortgage Lenders Differ in Terms of Quality and Affordability

Many consumers think of lenders as the enemy. They are the ones charging expensive fees, giving borrowers high interest rates and, when it comes to reverse mortgages, taking advantage of seniors. Fortunately, this could not be farther from the truth. rnReverse mortgage lenders are a senior’s greatest ally. A great lender acts as a borrower’s guide. Reputable lenders help seniors choose a loan product, select a payment option and ensure that a reverse mortgage is in their best interest. This is why it is so important for seniors to know how to choose a quality lender. rnLooking for Reputable and Friendly Reverse Mortgage Lenders Reverse mortgages are fairly complicated loans, and most seniors have a lot of questions. While reverse mortgage counseling is required of every borrower, it is still important to find a lender who will explain the loan process and address any concerns the borrower might have. During the loan process, seniors should feel comfortable, informed and protected. Seniors should not feel pressured or uncomfortable with any paperwork they are being asked to sign. Choosing a lender who is easy to reach and pleasant to work with is an essential part of the process. The right lender might not have an immediate answer to every specific question a borrower may have. They will, however, be knowledgeable and able to find the answer to specific questions in a timely matter. Lenders who rush borrowers, dodge questions or act suspicious should be avoided. In these modern times, many seniors do not meet their reverse mortgage lenders in person. Business is commonly conducted over the phone, by mail and by e-mail. Seniors can even complete counseling over the phone instead of in person. Still, it is important for seniors to trust their intuition and select a lender whom they can trust. To ensure the comfort of their borrowers, reputable lenders encourage seniors to talk to family members and third party advisors before making any major decisions. Anyone who discourages outside opinions should not be fully trusted. rnHow to Spot Affordable Reverse Mortgage Lenders Reverse mortgages are commonly referred to as expensive. However, borrowers should know that reverse mortgage lenders are not responsible for sometimes making these loans more expensive than forward mortgage loans. What can make these loans a little pricier are the upfront and annual mortgage insurance premiums (MIPs) that borrowers are required to pay. Home Equity Conversion Mortgages (HECMs) are insured by the Federal Housing Administration (FHA). With the HECM Standard, borrowers pay a 2% upfront MIP which is collected by FHA. The HECM Saver carries a more conservative upfront MIP of 0.01% but provides smaller payouts. Both products carry an annual MIP of 1.25%. The annual premium is also charged by and collected by FHA. Reverse mortgage lenders cannot discount or eliminate these fees. While reverse mortgage lenders do not impact MIPs, they do have some control over their interest rates, origination fees and a few other costs. Borrowers can compare different lenders to make sure that they are getting a good deal. Fortunately for seniors, all fees are capped by FHA, so it is impossible to get ripped off by any licensed lender. Even so, finding a reputable lender who offers a fair deal is of the utmost importance when getting a reverse mortgage.