Who Is A Reverse Mortgage Good For
Reverse mortgage loans have helped more than one million Americans nationwide access their home equity to find greater security in retirement. The loan can be used in a number of ways, many of which are helping older adults achieve their financial goals and have a much better retirement.
The Pragmatic PlannerThe MaximizerThe HomebodyThe New HomebuyerThe Safety-Net SeekerThe Eager Retiree
For Reverse Mortgage Loans With Case Numbers Assigned Before August 4 2014
As explained in more detail below, after you, the borrower, die or move into a healthcare facility for more than more than 12 consecutive months, your lender or servicer can choose to either:
- Foreclose on the home, or
- Enter a process called Mortgage Optional Election Assignment that allows an Eligible Non-Borrowing Spouse to stay in the home.
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Reverse Mortgage Lenders Of Days Gone By
Historically, the banks were the major players in the reverse mortgage lenders market. In 2019, the following institutions had the largest market share of the reverse mortgage lenders: CBA Reverse Mortgage, Macquarie Bank Reverse Mortgage, Westpac Reverse Mortgage and Heartland Australia. Today, reverse mortgages are provided by Household Capital, Heartland and a few smaller lenders.
While some of the major banks may still have reverse mortgage clients on their books, the last of them ceased offering the product in early 2019. This was CBA, which was previously active in the reverse mortgage industry through its own brand as well as its subsidiary Bankwest. CBA purchased Bankwest in 2008 and continued to offer reverse mortgages through the brand. CBA had been the major operator in the industry however, on 1 January 2019, CBA and Bankwest removed reverse mortgages from their product range.
For many, that the big banks exited the reverse mortgage market was not seen as a negative for the sector. Traditional bank reverse mortgages were not always aligned with the long-term housing and income needs of Australian retirees and often failed to provide genuine retirement funding adequacy and certainty. This stemmed from several reasons, notably a focus on the short term consumption of home equity and a sales culture that targeted the neediest clients, so reverse mortgage funding became an option of last resort rather than part of a long term retirement funding plan.
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The Pros Of Proprietary Reverse Mortgages
- Larger loan amounts: Because the loan doesnt have to conform to loan limits set by the FHA, you can receive larger loan amounts with proprietary reverse mortgages than with other types of reverse mortgages.
- Unlimited uses for funds: The proceeds from a proprietary reverse mortgage can be used for anything. That includes paying for home renovations, living expenses, travel and more. The only type of reverse mortgage that limits how you can use your funds is the single-purpose reverse mortgage.
- No upfront mortgage insurance: Since these loans arent federally insured, you wont pay upfront mortgage insurance fees. The upfront mortgage insurance fee for a HECM is typically about 2% of your homes value. Not having to pay that fee on a $500,000 home could save you $10,000.
- No monthly mortgage payments: This type of loan pays off your existing mortgage and youre not required to make payments on the reverse mortgage until the loan comes due. However, you must still pay your property taxes and homeowners insurance.
Best Online Option: Longbridge Financial
Longbridge Financial
Since reverse mortgages are largely defined by the FHA parameters, Longbridge Financial stands out as the best online option because of the easy-to-access educational materials on its website, and its best-in-the-business online quote generator.
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Does not sell closed contracts to other loan servicers who might charge added fees
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Low upfront costs
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Limited selection of proprietary loans
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No regional branches to meet in person with a counselor
If you like to educate yourself before you speak to a salesperson, Longbridge Financial is our best online option for you. On their website, you can get an online quote and watch a short video to help you better understand reverse mortgages. Theres even a section for adult children to learn more about how their parents reverse mortgage could affect them. Furthermore, you can learn about what to expect from the reverse mortgage counseling and application processes. Applications can be completed over the phone and loan closing can be done in the borrowers home.
Longbridges HECM products carry the same costs as all others, including origination, title, and escrow fees, appraisal costs, and PMI, all of which could run $4,000 to $8,000. For its proprietary, non-government reverse mortgage program, called Platinum Mortgage, youre exposed to lower upfront costs, potentially lower interest rates, and higher-value home loans.
Longbridge is licensed in all 49 states and the District of Columbia.
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Buyers Guide: How To Choose A Reverse Mortgage
When shopping for a reverse mortgage, most consumers neglect to comparison shop. FHA regulation of HECM reverse mortgages may be behind this trend as regulation renders the costs and fees for HECMs somewhat homogenous. But at Caring, we do recommend comparison shopping for reverse mortgage products as some lenders may offer lower marginal interest rates than others, and some will even cut out or offer rebates for the $25 to $35 monthly service fees that commonly come with a reverse mortgage. Furthermore, shopping around may help you gain a better understanding of which major type of reverse mortgage would be the best fit for your circumstances and which lender can offer you the kind of customer service you desire.
Once its time to start fielding offers from lenders, there are a few measures that reverse mortgage shoppers should take to home in on their pool of potential lenders. Well explore these measures below, step by step.
Get financial counseling with a HUD representative.
To find a HUD counselor in your locale, HUD.gov recommends using the HECM Counselor Roster online or calling 569-4287. To find a list of nationwide HUD counselors, use the HUD Intermediaries Providing HECM Counseling Nationwide list.
Meet with a financial advisor.
Research lenders backgrounds.
Start fielding offers.
You To Reverse Mortgages That Do You Can Be Financed Into A Possibility That
HUD posting the results of actual loans so you can see for yourself which companies close loans for borrowers at the lowest average rate for the entire year. From the beginning of the loan process all the way through to the end, Eric went above and beyond to make this a hassle free experience. No monthly mortgage payments. RMF a dependable and stable prospect. Young continued fighting in court, finally clearing the title this fall. In addition to excelling in other areas, One Reverse Mortgage offers a broad array of loan choices and is backed by its parent company Quicken Loans. What are available on your heirs can sign anything nor your heirs do reverse mortgage creating liquidity that there are not on reverse mortgage services. Create a cookie for forbes. Homeowners who suddenly vacate or sell the property have just six months to repay the loan.
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Hecm Stands For Companies That
The only HECM costs that lenders do not control are the upfront and monthly mortgage insurance premiums. HECM is a great means of mitigating the costs of borrowing, even in a rising interest rate environment. If you want to leave your home to your children, having a reverse mortgage on the property could cause problems if your heirs do not have the funds needed to pay off the loan. Depending on the program, the reverse mortgage may be transferable to a different property if the owner moves. What Type of Mortgage is Best for Me? Find the Best Reverse Mortgage loan Company with NHL! You can add your own CSS here. Because the loan is federally insured, you are protected against things like lender defaults or housing market declines. Or is easily get started and goldwater bank? Offer pros and cons are determined by our editorial team, based on independent research.
Best For Ease Of Qualifications: Reverse Mortgage Funding
Reverse Mortgage Funding
Reverse Mortgage Funding has a proprietary reverse mortgage product that permits non-FHA-approved condos, has lower borrower age requirements, and has higher equity access making it our best for easier qualification.
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Offers educational resources, including an on-demand webinar
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Provides price matching to compete with other lenders offered interest rates and fees
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Offers $1,000 gift cards to borrowers for whom they cannot match a competitors rates
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Qualify as young as 60 years old, except in North Carolina, Texas and Utah. Also available to borrowers as young as 55 in select states.
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Offers few online tools and resources
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Limited loan offerings
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Equity Elite® is not affiliated with the HECM loan program insured by the FHA
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A non-borrowing surviving spouse who wants to reside in the home needs to have a plan to pay off the loan
Reverse Mortgage Funding focuses exclusively on reverse mortgages and is our favorite choice for borrowers looking for an easier qualification process. With its Equity Elite® reverse mortgage program, you can qualify at age 60, whereas traditional HECM loans need you to be at least 62.
The program is also available to owners and buyers of non-FHA-condos, thus opening up an additional category of homes for qualification. If your home value and equity reach $4 million, you can qualify for a loan amount of that size, where a traditional HECM caps at $970,800.
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Our Top Picks For Best Reverse Mortgage Companies
Why we chose this company: With a reverse mortgage, interest is added to the loan balance monthly based on the interest rate your loan carries. By choosing Longbridge Financial, you may be able to minimize those costs.
When we analyzed government-backed Home Equity Conversion Mortgage rate data from March 2021 to March 2022, Longbridge had the lowest average rate across our list. The company the No. 6 reverse mortgage lender in the country by volume averaged a mere 2.14% for the 13-month period. By comparison, the average rate across all our top reverse mortgage lenders was 2.35%.
Low rates aren’t the only thing Longbridge has going for it, though. The company also has great customer reviews and few complaints, and it remains your servicer after closing meaning you’ll do business with the same company for as long as you have the loan.
Longbridges highly informative website is worth noting, too. The site offers personas to help match you with the right information for your needs. Looking for HELOC alternatives? Click on Walter, and youll get info on how reverse mortgages compare to home equity lines of credit. Want to know how much you could receive from a reverse mortgage? Click on George and go to Longbridges reverse mortgage calculator. There is also an online quote tool, FAQs and an Ask an Expert section.
Be Wary Of Sales Pitches For A Reverse Mortgage
Is a reverse mortgage right for you? Only you can decide what works for your situation. A counselor from an independent government-approved housing counseling agency can help. But a salesperson isnt likely to be the best guide for what works for you. This is especially true if he or she acts like a reverse mortgage is a solution for all your problems, pushes you to take out a loan, or has ideas on how you can spend the money from a reverse mortgage.
For example, some sellers may try to sell you things like home improvement services but then suggest a reverse mortgage as an easy way to pay for them. If you decide you need home improvements, and you think a reverse mortgage is the way to pay for them, shop around before deciding on a particular seller. Your home improvement costs include not only the price of the work being done but also the costs and fees youll pay to get the reverse mortgage.
Some reverse mortgage salespeople might suggest ways to invest the money from your reverse mortgage even pressuring you to buy other financial products, like an annuity or long-term care insurance. Resist that pressure. If you buy those kinds of financial products, you could lose the money you get from your reverse mortgage. You dont have to buy any financial products, services or investment to get a reverse mortgage. In fact, in some situations, its illegal to require you to buy other products to get a reverse mortgage.
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Compare The Loan Terms Including But Not Limited To Fees
Lending laws do not allow originators to pad any closing costs. Appraisals, title fees, credit, etc., can only charge what those companies charge. Originators cannot, by law, add anything to those fees. Many borrowers look only at the fees on an adjustable-rate loan.
You should also look at the margin if you are looking at an adjustable rate loan, as a higher margin can cost you thousands and tens of thousands of dollars in interest over the life of the loan, just as a higher interest rate can on a fixed rate loan.
Not only that, but the higher margin raises the effective rate which lowers the Principal Limit the borrower will receive. The effect of the higher margin is you receive less money in the loan and you pay significantly more interest over the life of the loan.
Do not overlook the margin!
Since the UFMIP is based on 2.0% of the appraised value of the home to a current maximum of $970,800, the UFMIP can go as high as $19,416. With an increased interest rate option, there is a possibility that we can absorb all or a portion of this upfront insurance, saving you thousands.
In some cases, the higher margin and lower fee would cause you to receive less money overall. That is why it is important to compare and see which is really a better option for you.
One Reverse Mortgage Review
Great Products | 4.05 Stars
In addition to excelling in other areas, One Reverse Mortgage offers a broad array of loan choices and is backed by its parent company Quicken Loans. Before you get started with One Reverse Mortgage, the company schedules a free educational session with a HUD approved counselor to discuss the process, and to find out if you qualify.
Screenshot: One Review Products
One product option is a fixed-rate Home Equity Conversion Mortgage that offers customers the loan in one lump sum, which is ideal for people who want to pay off the remainder of a loan such as a mortgage or a vehicle.
The second option is an HECM line of credit. This allows for multiple ways for the funds to be disbursed, including monthly payments. This option tends to be the most popular reverse mortgage as customers have flexibility in how they receive their money, whether it be in monthly installments or as a line of credit where they can take what they need on an as needed basis. As a third option, One Reverse Mortgage offers an HECM for purchase option where customers can borrow money to purchase a new home instead of turning home equity into cash. This option is good for a customer who wants to downsize their current home or want to move closer to family members.
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Get Your Heirs Involved In The Process
Your decision to take out a reverse mortgage loan could affect family you leave behind, so include them in the decision-making process as much as you can. If you pass away and leave the home to your children or any other heir, they have the option to pay whats left on the loan so they can keep it or sell the house. If they sell it, many reverse mortgage loans include a non-recourse clause which means heirs dont owe more than the homes worth when its sold. So, if the reverse mortgage loan was for $300,000 and it only sells for $260,000, your heirs dont have to pay the $40,000 difference.
Best Reverse Mortgage For Purchase: Finance Of America Reverse
Finance of America Reverse
Finance of America Reverses HomeSafe program is a non-government reverse mortgage product that is ideal for seniors who want to move into a new home to downsize their living space, live in a home that better suits their physical limitations, or perhaps move closer to their kids, making it our best solution for using a reverse mortgage to purchase a new house or condo.
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Loans up to $4 million
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Proprietary product only in 27 states
Many people in their 60s have raised their kids and find themselves empty-nesters in a large home with space they no longer need. FARs HomeSafe program is the best choice for people who want to combine the benefits of a reverse mortgage with buying a new home that better meets their location, size, and layout needs.
HomeSafe works well for owners of high-value homes because it provides access to up to $4 million of equity to be used towards a purchase of a new home or condo.
With HomeSafe, many of the closing costs can be rolled into the reverse mortgage. You still have to account for appraisal, title, and escrow fees. It may charge a servicing fee of up to $35 per month for some borrowers.
FARs HomeSafe, HomeSafe Flex, and its standard HECM reverse mortgage provide borrowers with multiple ways to access their proceeds, such as lump sum, term payments, and a line of credit.
FARs HECM product is available in all 50 states, but HomeSafe is limited to 27 states plus Washington, D.C.
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