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How to find the BEST Reverse Mortgage Lender

May 24th, 2011
     

Looking for the Best Reverse Mortgage Lender?

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I am looking for the best reverse mortgage lender. I have felt I was being cheated in the pass from a lender, so I decided against it, because of high fees, Interest rate, insurance premium, and closing fees. Also I understand in Sept 2011 there will be, once again changes in the Reverse Mortgage. Some are saying it may close down permanently, is this true? Also, HUD & FHA are now investigating 3 of the top lenders dealing with mortgages. Will that interfere with the Reverse Mortgage changes already set? What is the interest rate that is sat at this time? I think the Reverse Mortgage Saver is a great Idea. It does help bring down the cost and fees that is being charged from some lenders. I think the reverse mortgage is a great Idea for Senior Citizens; it should be fair to all. Thank you, – Carolyn

Hi Carolyn,

You have brought up a number of issues so forgive me if this response is a bit lengthy. Firstly let’s deal with the interest rates. Rates are at an all-time low on many of the products right now, especially the fixed rates loans. However, rates are a function of the secondary market. In other words, they will go up and down depending on how much they fluctuate on the securities that are selling which are backed by the reverse mortgages.

If you compare the fixed rate mortgages at this time, you will find that there are many options available at LESS THAN 4.5% at NO ORIGINATION FEE, and rates going down to as low as 4.00% with a small origination fee (keep in mind that this is the Note rate and not the APR).

It’s amazing to me but we’ve actually had borrowers calling in lately after receiving quotes as much at three quarters of a percent higher in rate and some with origination fee above what we can do for them and then they tell me that the other lender told them that either we were going to “make it up in other fees” or other cautionary comments meant to scare the borrowers into staying with them at a higher rate.

Lending laws do not allow originators to pad any fees. Appraisals, title fees, credit, etc., all can be charged at only 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 must 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.

A loan with “No Origination Fee” can cut thousands of dollars off the cost of your reverse mortgage. You mentioned the Saver Program and it can also save borrowers money. The Saver Program is currently available at the lowest rates since HUD first announced it and it saves borrowers greatly on the Up-Front Mortgage Insurance Premium (UFMIP). It does not give you as much money as the Standard reverse mortgage program and the rate is typically a little higher, but if you do not need as much, the Saver is a great way to reduce closing costs.

Since the UFMIP is based on 2% of the appraised value of the home to a current maximum of $625,500, the UFMIP can go as high as $12,510 on the Standard Program and is usually the single largest cost on most reverse mortgages. Compare that to the reduced UFMIP on the same property value Saver loan of just $62.55. Borrowers who can afford to take less money can save as much as $12,447.45 on the reduced cost. Add that to no origination fee, and depending on the closing costs in your area of the country, borrowers can close a reverse mortgage loan for less than $5,000 and many times less than $2,600 in the lower closing cost areas.

It is true that we are operating under a temporary increase in the HUD lending limits. The permanent limit is $417,000 and the current temporary limit is $625,500. There is quite a bit of speculation at this time as to whether the limit will revert back to the permanent level of $417,000 on October 1, 2011 when HUD begins its new fiscal year. It would take a vote of Congress to extend the current increase and with the mood in Washington, no one can say if this would happen.

If the limit did change, it would affect those properties with values over the lending limit and those borrowers would receive less under the program. Any actions taken by HUD with regard to reverse mortgage lenders should not affect any loans currently in force since those loans are already insured by HUD.

Finally, if the originator belongs to the National Reverse Mortgage Lenders Association (NRMLA), and/or the National Association of Mortgage Brokers, (NAMB) they must adhere to extremely high ethical standards (we are members of both). Our company is also listed as A+ with the Better Business Bureau. If you want to see what our customers are saying about us, please take a look at the comment cards we have posted.

Were we able to help every borrower? No, but then again, no lender is since the HUD reverse mortgage program was not meant to cover all situations and all properties. Values have dropped over the past several years and appraisals have been tough, but all lenders are fighting with these issues. We believe that Senior Borrowers should be given all the facts and then be allowed to make the decision that is in their best interest.

For that reason, we don’t use an Appraisal Management Company (AMC) that is owned in whole or part by just one lender so that borrowers are trapped if another lender can give the borrowers a better deal. This creates a conflict that prevents borrowers from being able to transfer the appraisal and some banks routinely follow this procedure, locking borrowers into loans they later cannot change. It’s a loophole in HUD’s intentions but there is currently no way to get the AMC to cooperate as they say they cannot work with anyone but the lender who placed the order (who, conveniently enough, owns them).

If you do your homework and get solid quotes before you begin and then verify the credentials of the originator and the company, you should be able to avoid that feeling of being cheated when you know you’re getting the best possible deal from the beginning.

“Best Reverse Mortgage Lenders” by www.allrmc.com

The experts at All Reverse Mortgage® are here to answer your questions! If you have an inquiry about reverse mortgages give us a call Toll Free (800) 565-1722 or request a quote by clicking here »

PS – We also welcome and respond to comments below…

Also see:

Best Reverse Mortgage Lender By Mike Branson – Add me to your circles

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8 Responses to “How to find the BEST Reverse Mortgage Lender”

  1. Mr Franklo says:

    Congratulations on the strength of your article. Can you answer this difficult question. After the Lender (Bank) and the Senior Citizen (Client) have signed off on the contract and first checks have been sent and received, can the Lender (Bank) lower the payments to the Senior Citizen (Client) without the Clients approval. If so what would be the reasons that the lender can lower the payments and under what provision in HUD or otherwise can this take place? Respectfully -Frank

  2. admin says:

    Hi Frank,

    This is what we have been touting as one of the benefits of a reverse mortgage, that unlike a traditional Home Equity Line of Credit (HELOC) that you might get from your local bank, the lender can never decide to arbitrarily close the line or alter the terms. The loan is insured by the Federal Housing Administration, a division of HUD, so that the lenders are not at risk and can continue to keep the loan active at the existing terms for the life of the borrower(s).

    You have to realize that just like other mortgages, there are conditions that you must meet on a reverse mortgage to stay in good standing on a reverse mortgage and to continue to receive your reverse mortgage funds. Those are spelled out in the mortgage documents. You must continue to occupy the property as your primary residence; you must maintain the property in a reasonable fashion and you must keep the taxes and hazard insurance current. If you live in a project that has an association, then those dues must also be kept current. If you fail to do these things, then the lender can ultimately call the Note due and payable but could also cease additional draws on the lines until the defaults were cured. The lender will not ever alter the terms on your reverse mortgage after closing and your obligations under the mortgage are also a portion of those terms.

  3. William says:

    Which companies would you recommend in the San Francisco-Berkeley area for a reverse mortgage?

    I am turning 62 in January 2012 and am doing my research a couple of months ahead of the actual time when I am qualified to apply.

    Thank you – William L, Esq.

  4. Mike Branson says:

    Hi William,

    I would recommend our company, All Reverse Mortgage Company. We originate and fund loans in 15 states and the US Virgin Islands. We make the process extremely easy for borrowers no matter where you are. If you have not already done so, the first step is the HUD mandated counseling and you can choose one of the counselors from the list we include with our proposal, or any HUD approved counselor. The counseling can be done via telephone and all the numbers are toll-free so it really doesn’t matter what counselor you choose anywhere in the United States unless you choose to go and do the counseling in person (face-to-face). Then you would choose a counselor that is located close to your area.

    It will take a call of about 5 – 7 minutes for us to gather the information necessary to complete your application, then we will send it to you via over-night delivery, with an envelope to return it the same way. Once we receive your signed loan application and counseling certificate (that is what the counselor will give you after you have completed your call or visit), we can usually have the loan completed within 30 days assuming there are no unusual delays in the appraisal process, issues regarding the property itself or other liens, etc. we need to resolve. In your case, we do need to wait for your 62nd birthday to begin the application process though so the timeframe could not start until then.

    During the following 3 weeks after we receive your signed package back in the overnight delivery, we will order the appraisal, get the title work completed, take care of all lender requirements and have the loan approved. The appraiser will contact you to make an appointment, the sooner you make yourself available to him/her, the quicker the process can take place. There is never a need to hurry, just note that if you cannot meet with the appraiser for several weeks, this will delay the time period quoted above. After we get everything done and the underwriter approves the loan, we are ready to order your loan documents when you are ready to close your loan.

    When you are ready to close the loan, we will send a notary with the final loan documents directly to your home. It’s nice to know you will be able to sign in the comfort of your home, at your pace. Then the laws require that you have a 3-day right of rescission on all refinance transactions which allows you one final opportunity to cancel should you decide you want to change your mind. The 3 day right to rescind does not include the day you sign, Sundays or holidays so it actually runs 4 days (or more if it extends over a weekend or holiday). At that point, if you have not cancelled your loan, your loan will fund and any proceeds you have coming to you at closing will be either electronically transmitted to the account you previously designated or sent to you by check, whichever you prefer (we highly recommend the wire transfer as there is no delay in receipt of funds and never a hold placed on the funds by your bank since it is the same as a cash deposit).

    We do not pressure borrowers and encourage you to check out our rates and fees with anyone. Please let us know if we can assist you with your reverse mortgage request. Call us Toll Free at (800) 565-1722 or request a free analysis here

  5. Paul Mitchell says:

    I have lived in my house for 15 years. My elderly mother owns the house. She wants to sign the house over to me. There is no mortgage on the house. Is there a waiting period I must wait before I can apply for a reverse mortgage or I can I apply immediately? I have paid all utilities, insurance and real estate taxes on the house.

  6. Mike Branson says:

    Hi Paul,

    Most companies do have a 90 day period that you must be on title before application. This is not a HUD requirement, but due to the fact that too many instances arose where family members deeded a property over to another family member just to avert reverse mortgage requirements, most lenders did implement the 90 day period whereby the lender could verify the occupancy and intent of the borrowers.

  7. Alison Loy says:

    My mom would like to move.

    Is it possible to apply for a reverse mortgage directly on the new house so she doesn’t have to close with an initial mortgage, then turn around and pay fees again to set up the permanent reverse mortgage?

  8. Mike Branson says:

    Hi Alison,

    Absolutely! HUD announced the HECM for purchase program (often pronounced “Heck-um”, and is HUD’s acronym for Home Equity Conversion Mortgage) in 2008 and actually rolled the program out to the public in 2009. Since then, we have closed many purchase HECM’s for borrowers all over the United States and at this time, Texas is the only state that the state laws prohibit this transaction (but even they are moving a Bill through their legislature to allow the HECM for Purchase product).

    Our calculator on our website at http://www.allrmc.com/reverse-mortgage-calculator.php also gives you the option to select “purchase” and your mom can run various scenarios to see how much home she can comfortably purchase based on her benefits under the program. If you have any questions on the program itself, please feel free to contact us.

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