Reverse Mortgage Lenders
A reverse mortgage is a different type of loan strictly available to homeowners who are at least 62 years of age. It does not require the owner to pay the mortgage every month like the traditional mortgage; rather, the lender makes a monthly payment to the borrower.
The reverse mortgage is also referred to as Home Equity Conversion Mortgage (HECM), and it is backed and insured by the federal government. Most seniors believe that all lenders provide the same experience due to its regulation by the government. Lenders are restrained in the fees they can charge borrowers; some reverse mortgage lenders offer superb services.
Reverse Mortgage Lenders have a responsibility to educate the homeowner.
Great reverse mortgage lenders do not only lend money to the borrowers but also educate and support them throughout the loan process. It behooves the lenders to provide a clear explanation of their various options when seniors contact them for a loan.
The HECM products offered by the Federal Housing Administration (FHA) should be explained to the seniors. And the seniors that intend to purchase a new home with the proceeds of a reverse mortgage can benefit from the HECM for Purchase. The product, costs, benefits and shortcoming of each loan product should be explained in details to the seniors.
Besides, a good lender should also describe the borrower’s responsibilities after securing the loan such as payment of property tax and insurance, and maintaining the house. Borrowers that fail to fulfill these obligations could be asked to repay the loan soon. Therefore, repayment and how the borrower or their heirs could repay the loan should be explained clearly to the borrower.
A good reverse mortgage lender is flexible and honest by readiness to speak with the borrower’s family and financial advisors. Be wary of lenders that discourage you from talking to your relatives and financial advisors about your intention. Reliable reverse mortgage lenders should encourage the seniors to take HECM counseling to prevent the seniors from having any misconceptions.
Furthermore, good reverse mortgage lenders should explain the actual costs of the loan option for the borrowers. They should be honest to disclose all their charges and long-term costs without any hidden charges. Borrowers should be made to understand that they would pay for an assessment, origination fees, and closing costs. It is a prerequisite that borrowers should pay for insurance because reverse mortgages are insured by FHA. However, these expenses are factored into the loan to prevent paying these costs out-of-pocket.
Great reverse mortgage lenders give a Total Annual Loan Cost (TALC) disclosure. The essence of the disclosure is to explain in details the cost of getting a reverse mortgage over the life of the loan as it discloses the expected rate of interest and estimated fees.
A warning about Reverse Mortgage Lenders
Lenders who provide incomplete information or are not willing to explain the costs of the loan should be avoided. Getting a reverse mortgage is a crucial financial decision, you should not feel pressured to choose a lender or a loan that you do not have complete information about. Compare different lenders and read reviews about them before taking a decision on which lender to approach for the reverse mortgage.
Find out more about Reverse Mortgage Lenders.