If you’re a homeowner age 62 or older, a Home Equity Conversion Mortgage (HECM) —also known as a reverse mortgage—could allow you to tap into a portion of the equity in your home to supplement retirement income. With no monthly mortgage payments required*, reverse mortgage funds could be used however you wish—whether it’s to pay off outstanding debt, pay for healthcare expenses like prescriptions or in-home care, make home improvements or repairs, or even just build up that ‘rainy day fund.’
But financial decisions are important ones. And determining whether a reverse mortgage loan is right for you is not the only decision you’ll be faced with—you’ll also have to select the right lender.
Let’s set the record straight—when it comes to reverse mortgages, all lenders offer the same FHA-insured HECM, but not all lenders are created equal. And with so many lenders offering competing services at varying costs, it can be overwhelming to choose the lender that’s the best fit for you. Since not all reverse mortgage lenders provide the same level of service, it’s important to carefully weigh all your options. If you’re looking for a reputable reverse mortgage lender, consider the following steps to get started.
- Credentials Count
When looking into reverse mortgage lenders, it’s important to consider their professional credentials. Are they Federal Housing Administration (FHA) and Department for Housing and Urban Development (HUD) approved? Updated lists of approved reverse mortgage lenders are available online to help you identify lenders that are in adherence with FHA- and HUD-set guidelines and standards. Furthermore, HUD-approved companies are direct lenders, which will ultimately save you time and money by eliminating any third parties and associated costs.
In addition to FHA and HUD, you’ll want to check which lenders are active members of the National Reverse Mortgage Lenders Association (NRMLA). This association upholds reverse mortgage lenders to the highest standards of ethics and a strict code of values, including fairness, confidentiality, integrity, competence, diligence, and professionalism.
As an approved FHA lender, Longbridge Financial offers loan products that are insured by HUD. We’re also a proud member of NRMLA and fully subscribe to its Code of Ethics. Not all lenders can say that.
- Interest Rates and Fees
Nobody likes to spend more money than they have to, especially when it comes to interest payments and various fees. Just like a regular “forward” mortgage, you will be required to pay interest on a reverse mortgage. And with interest rates being a key contributing factor in the total cost of the loan, choosing a lender with better rates can go a long way in saving you a significant amount of money over the course of the loan. When it comes to reverse mortgages, you have the option of either a fixed or adjustable rate, so you’ll first need to decide which is a better fit for your unique situation and financial goals.
In addition to interest rates, you’ll want to consider any origination fees, closing costs, and/or servicing fees a lender may charge. While the Mortgage Insurance Premium (MIP) is the same across the board for all lenders, these other fees can vary by company. When shopping around, be sure to ask for estimates for these fees and costs from each lender. By providing some basic information, you can get a written estimate from the get-go. Furthermore, the lender you decide to work with is required to provide you detailed disclosures outlining all costs twice throughout the loan process—first upon application submission, and later at the time of closing.
At Longbridge Financial, we strive to make reverse mortgages affordable for as many homeowners as possible. That’s why we make the process transparent, with no hidden fees.
- Post-Loan Service and Support
After your loan closes, does your lender continue to service your loan, or do they sell it to a third party? If it’s the latter, it’s important to realize you’ll be working with a different company – not the original lender you so carefully selected. Like traditional mortgages, reverse mortgages can be sold multiple times. If you value continuity and consistency, you’ll want to strongly consider a lender that services their own loans.
At Longbridge Financial, we’re not just a lender—we’re a loan servicer, too. That means you’ll work exclusively with Longbridge throughout the entirety of the loan. With online, anytime access to your account, our goal is to give you great service and peace of mind about your finances. Better yet, our servicing department is always just a phone call away.
- Legitimate Reviews and Customer Feedback
In today’s digitally-driven world, few things are more powerful than a 5-star review. And like all major decisions, selecting the best-rated reverse mortgage lender requires some research. While this means reading the reviews of actual customers online, you’ll want to beware of some of the paid advertisements and reviews you’ll find. Nowadays, very few websites offer legitimate, non-sponsored reviews—often, these reviews can be bought and sold. To make sure the reviews you’re reading are, in fact, legitimate, it’s best to visit honest, independent, third-party sites like Yelp, Google, and the Better Business Bureau. These sites do not accept monetary incentives for sponsored reviews.
Longbridge Financial also invites customers to share their experiences on Trustpilot, a consumer review site that goes above and beyond to fight fake reviews. We invite you to check out our nearly 500 reviews to see what people like you have to say about us.
- Putting Your Best Interests First
One of the most important keys to a successful reverse mortgage is knowing you’re getting the right loan for you, the first time. And the right lender will understand your needs, since the loan is all about you, not the lender.
We at Longbridge Financial are committed to recommending the reverse mortgage program only after we are certain the program is right for you and meets your needs. We’ll get to know you, your goals, your home, and your finances as we discuss your options. Better yet, you can rest assured that if we ever feel like the loan is not the best option for you, we will tell you so.
Whether you’re planning your own retirement or taking steps to help a loved one prepare, a reverse mortgage loan is a big decision. Finding the right lender is not only the first step, but perhaps the most important step in considering a reverse mortgage. From answering all of your questions and addressing any concerns, to helping you understand your options and which product could best fit your unique needs, the right lender not only simplifies the reverse mortgage process, but goes above and beyond to make your experience the best it can be.
At Longbridge Financial, we feel so strongly about going above and beyond to ensure your total satisfaction, that we’ve put our list of promises in writing. What’s more, our team of reverse mortgage experts make sure you receive trusted, personal, and professional support through each step of the process.
* Real estate taxes, homeowners insurance, and property maintenance required.