Best Reverse Mortgages for Seniors in 2019

Our experts have researched 12 reverse mortgage companies and recommend 5 of them (for seniors)

Last Updated On: March 8, 2019
The 3 Best Brands
AccoladesBest OverallBest Customer ServiceBest Mortgage Options
How to Order
Scroll right for more options

Top 5 Highest Ranked Reverse Mortgages For 2019

A reverse mortgage is a major financial decision that could impact your financial health, so it is crucial to find the right lender. Rates, fees and other numbers could get really confusing. The good news is that we have put in the leg work to help you find the best options.
  • American Advisors Group- With a 97% customer satisfaction rate, American Advisors Group is our top pick for senior reverse mortgages.
  • One Reverse Mortgage- Brought to you by Quicken Loans, One Reverse Mortgage is one of the most reliable and trusted lenders in the market.
  • Finance of America- Finance of America is a great reverse mortgage option thanks to the level of care they put into each personal interaction.
  • All Reverse Mortgage- All reverse mortgage has been helping seniors with reverse mortgages for over 15 years.
  • Live Well Financial- Live Well Financial offers low fees and fair rates making it a great option for seniors seeking a reverse mortgage.

How We Chose Our Top List

We researched the most trusted reverse mortgage lenders on the market and did hours of research. From this research, we ranked the top companies based on the options they offer seniors. Take a look at our list of the best reverse mortgage companies for seniors.

20
Services considered
2
Experts consulted
25
Services selected
17
Hours of research
1. American Advisors Group
Ease of useExcellent
Service & ResponseExcellent
Features & TechExcellent
Pricing

Overview

American Advisors Group is the leading provider of FHA-backed reverse mortgages. Founded in 2004, California-based American Advisor’s Group is the largest reverse mortgage lender in the country, offering a full range of reverse mortgage products.

American Advisors Group has consistently good customer reviews with very few complaints across many different consumer-based review sites. Borrowers agree that American Advisors Group is committed to offering outstanding customer service and providing various resources and tools on their website – a free info kit, a home equity calculator and professional advisors ready for phone consultations.

American Advisors Group offers these loan types:

  • HECM Traditional
  • HECM for Purchase
  • HECM Refinance
  • Proprietary Reverse Mortgage

They offer the following loan disbursements:

  • Lump sum payment
  • Monthly disbursements (tenured)
  • Line of Credit
  • Some combination of the above
Pros
  • FHA-backed
  • B+ grade with the Better Business Bureau
  • Positive customer reviews
  • Few complaints lodged against them
  • Zero-pressure sales tactics
Cons
  • Consumer complaints revolve around a common theme which includes relatively aggressive marketing tactics, an abundance of paperwork and lengthy process
2. One Reverse Mortgage
Ease of useExcellent
Service & ResponseExcellent
Features & TechAbove Average
Pricing

Overview

Also headquartered in California, One Reverse Mortgage has been in business since 2001; but, was purchased by Quicken Loans’ parent company (Rock Holdings) in 2008. It’s a nationwide reverse mortgage company licensed in all 50 states. One Reverse Mortgage is a member of the National Reverse Mortgage Lenders Association and US Department of Housing and Urban Development (HUD), approved by the FHA and Equal Housing Opportunity and insured by the Federal Housing Administration and HUD. They have an A+ rating with the Better Business Bureau.

Following the Quicken business model, it gives out loans only through phone and online transactions. Even without the opportunity to speak to a lender face-to-face, One Reverse Mortgage consistently receives high marks for customer service.

In 2017, One Reverse Mortgage had the sixth-highest volume of reverse mortgage lenders nationwide. Unlike other lenders’ sites, One Reverse Mortgage does not ask for lots of personal information up front. Instead, they offer potential customers a goodly amount of information without a lot of digging.

One Reverse Mortgage allows potential borrowers to enter information into a reverse mortgage calculator to get an estimate before asking for your name and address to receive additional information. They explain a lot of details upfront that other providers might gloss over such as fees, disbursement limits, mortgage insurance premiums and other requirements mandated in all HECM products.

One Reverse Mortgage offers:

  • An adjustable rate HECM
  • A fixed rate HECM
  • HECM for purchase

They offer the following loan disbursements:

  • Lump sum payment
  • Monthly disbursements (tenured)
  • Line of Credit
  • Some combination of the above
Pros
  • Receives a lot of praise on social media for its online presence and customer service
  • Their user-friendly website offers potential customers a large amount of information without requiring your personal information
  • A+ rating with the Better Business Bureau
  • Relatively small number of complaints filed with the Consumer Financial Protection Bureau
Cons
  • Does not offer a proprietary jumbo loan
  • Online only and you cannot meet with a lender in person
3. Finance of America
Ease of useExcellent
Service & ResponseAbove Average
Features & TechAbove Average
Pricing

Overview

Formerly known as Urban Financial Group, Oklahoma-based Finance of America was founded in 2003 and is the second largest national reverse mortgage lender in the US, providing a more personal touch than many of its competitors. It’s also one of the few lenders offering a proprietary (jumbo) reverse mortgage for customers whose home value exceeds the limit set by HUD or not approved by the FHA to receive a HECM.

Finance of American operates in 43 states (plus Puerto Rico) and is a member of the National Reverse Mortgage Lenders Association, a member of the National Aging in Place Council and an Equal Housing Lender.

Products offered by Finance of America include:

  • Fixed-rate HECM
  • Adjustable-rate HECM
  • HECM for Purchase
  • Proprietary Reverse Mortgage

They offer the following loan disbursements:

  • Lump sum
  • Monthly disbursements (tenured)
  • Line of Credit
  • Some combination of the above
Pros
  • Offers loan products that some of its competitors do not
  • Has garnered high marks for its personable and direct customer service
  • Customer reviewers speak highly of the company’s loan originators, often mentioning them by name and detailing the lengths the representatives went through to help them with the complicated process
  • A+ rating with the Better Business Bureau
Cons
  • Some of its marketing information and online tools might not seem as helpful as they should or could be to provide everything you need to know
  • Their website doesn’t provide straightforward information, does not offer any way to get information about fees and rates, and until you provide your personal data, their reverse mortgage calculator won’t reveal any information either, forcing you to speak with a human to get details on their products
4. All Reverse Mortgage
Ease of useAbove Average
Service & ResponseAbove Average
Features & TechAbove Average
Pricing

Overview

Unlike many other lenders, All Reverse Mortgage specializes exclusively in reverse mortgages. Founded in 2004, California-based All Reverse Mortgage is backed by HUD and FHA.

Though one of the smaller reverse mortgage lenders, their customers’ satisfaction has led to positive reviews all across major consumer review sites.

All Reverse Mortgage provides a comprehensive Q&A section on their website, an online application and quote, reverse mortgage and home equity calculators, and a tool to check current interest rates; however, their site can be difficult to navigate.

Loan types offered by All Reverse Mortgage include:

  • HECM Traditional
  • HECM for Purchase
  • HECM Refinance
  • Proprietary Reverse Mortgage (jumbo reverse mortgage)

Loan disbursement options include:

  • Lump Sum Payment
  • Monthly disbursements (tenured)
  • Line of Credit
Pros
  • Low to no closing costs, origination costs or service fees
  • Overwhelmingly positive customer reviews across a variety of independent consumer review websites
  • Rates are generally quite good compared to other lenders
  • A+ Better Business Bureau rating
Cons
  • Only provides loans in 17 states
5. Live Well Financial
Ease of useAbove Average
Service & ResponseAbove Average
Features & TechAverage
Pricing

Overview

Since its humble beginnings in 2005, Live Well Financial has grown into a nationwide reverse mortgage lender. This Virginia-based company now operates in all 50 states and the District of Columbia. Ranked number 7 in volume since 2017, Live Well Financial has managed to avoid the negative headlines of many of its competitors.

Their website seems more focused on directing potential customers to talk to a representative or signing up for more information to be sent than on providing that information. Although Live Well Financial has an A+ rating from the Better Business Bureau, several complaints have been made to the Consumer Financial Protection Bureau.

Loan types offered by Live Well Financial:

  • HECM Tradition
  • HECM for Purchase
  • HECM Refinance
  • Loan disbursement options include:

Lump Sum Payment

  • Monthly disbursements (tenured)
  • Line of Credit
  • Some combination of the above
Pros
  • A plethora of positive reviews and ratings
  • A+ rating with the Better Business Bureau
  • They are a direct lender, with every step of the process handled in-house
Cons
  • Their website focuses mainly on the pros of reverse mortgages without addressing the cons, requires a lot of personal information upfront and provides a bare minimum of information
  • They don’t offer proprietary loans (jumbo reverse mortgages)

After retirement, you may find that your fixed retirement income just isn’t keeping up with the cost of living. Any number of reasons can leave you in a position of needing more money. As you try to figure out what you’re going to do to cover your expenses, you might want to consider using the equity you have accrued in your home to help. If you have lived in your home for a long period of time or if your home is paid off, the amount available for use could be substantial.

There are three ways you can use your home to get money. The first is you can sell it, but then you’ll have to go through the hassle of moving. The second, you can borrow against your home’s value, but you’ll have to make payments to repay the loan.

The third way leaves you with a win-win scenario. Not only will you get to keep your home … you’ll also receive cash to use as you wish, and you won’t have to make monthly payments to pay off the loan as long as you continue to live in the home. We’re talking about a reverse mortgage and we’ll be discussing reverse mortgages at length because it’s important you have the information you need to make the best possible choice for you now and in the future.

What is a Reverse Mortgage?

If you’re 62 years of age or older, own a home with sufficient equity and you meet all other eligibility requirements, you may qualify for a reverse mortgage – a loan taken against the equity of your home. It allows you to use the value of your home to get cash. And as we already stated, you won’t have to move and, as long as you live in the home, you won’t have to repay the loan.

Because you won’t be making a monthly payment, your income isn’t used to determine if you qualify for a reverse mortgage. In fact, you could have no income at all and still qualify!

Unlike typical home loans, with a reverse mortgage, you won’t make monthly payments or need any source of income to qualify.

Reverse mortgages are the “reverse” of a traditional home mortgage. With a traditional “forward” loan, you borrow money to purchase a home. As you pay off the loan, the debt (loan amount) you owe decreases while your home equity increases. When you paid off the traditional loan, your home’s equity equals the value of the home.

With a reverse mortgage, you are borrowing against the equity of your home.  With a reverse mortgage, you receive payment(s) which cause your debt to increase and your home equity to decrease. The money you owe to the lender (your debt) gets larger each time you receive a payment and as interest is accrued.

In short, a reverse mortgage loan allows persons age 62 and older to convert the equity of their home into cash they can use for whatever they choose.

All reverse mortgages convert your home’s equity into three things:

  • Loan advances paid to you
  • Loan fees and costs paid to lender and others
  • Leftover equity (if any remains) which is paid to you or your heirs when the loan becomes due

Comparing a Reverse Mortgage to a Traditional Mortgage

Since you’ve already had a traditional mortgage, it might be easier to understand a reverse mortgage by comparing the basics of the two loan types.

Reverse MortgageLoan FeaturesTraditional Mortgage
XMoney borrowed based on home equityX
XOwn the homeX
Prepayment penaltyX
XProtection against declining home values(1)
XOptional monthly payments(2)
XFlexible payment options
XHigher costs and fees to process
Need a source of income to qualifyX
  1. As a “non-recourse” loan, with a reverse mortgage, you’ll never owe more than the home is worth even if the housing market declines.
  2. Monthly mortgage payments are optional. The homeowner must continue to pay property taxes, pay homeowners insurance and maintain the property to avoid foreclosure.

When Reverse Mortgages Must Be Paid Back

Despite the debt increase, you typically won’t be required to pay anything back as long as you (or any co-owner) live in the home or until you (and any co-owner):

  • Are deceased
  • Sell the home
  • Permanently move out of the home (“Permanent move” generally means that you or any co-borrower has not lived in the home for one continuous year.)

When the reverse mortgage does become due because one of these conditions occur, the equity that remains in the home can be quite small (if any remains) and you (or your heirs) may owe a tidy sum of money. This may force you or your heirs to sell the home.

Repayment may also be required if you “default” on the loan by:

  • Not keeping your home well-maintained and in good repair
  • Not keeping the home insured
  • Not paying your property taxes

However, the lender typically has the option to pay for these expenses by reducing your loan advances and using the difference to pay for the insurance, property taxes or home maintenance if you have not already maxed out the loan value.

Other “conditions of default” include:

  • Abandonment of your home
  • The donation of your home
  • Your declaration of bankruptcy
  • There are eminent domain proceedings involving your home
  • There are condemnation proceedings against your home
  • Your perpetration of fraud or misrepresentation

A reverse mortgage may have an “acceleration clause.” This means that should certain conditions exist the loan becomes due and payable. These include:

  • Taking out new debt against the home
  • Adding a new owner to the home’s title
  • Renting all or part of your home
  • Changing your home’s zoning classification

It’s important that you review the loan documents thoroughly so you understand all conditions that can lead to your loan becoming due and payable.

Common Features of Reverse Mortgages

Although there are different types of reverse mortgages, most have the following features:

  • The owner of the home (or at least one spouse if a couple owns the home) must be 62 years of age or older.
  • Reverse mortgages must be “first” mortgages, meaning they should be the primary debt against the home. If the home is not paid off, you must pay off the current mortgage before getting a reverse mortgage or you may pay off the current mortgage with the reverse mortgage funds. However, if the current lender agrees to be paid after the reverse mortgage is paid, you may not have to repay the existing mortgage before getting a reverse mortgage.
  • Reverse mortgages are “non-recourse” loans. This means that the loan has a cap and you’ll never owe more than your home’s value. When seeking payment, the lender doesn’t have legal recourse to any other asset(s) than the home. A lender cannot seek repayment from any income you have, any other assets you own or from your heirs if you are deceased.
  • You continue to own the home which means you are responsible for homeowner’s insurance and property taxes.
  • You are responsible for the upkeep of the property. Failure to do so means the lender can call in the loan.
  • When the loan becomes due, you (or your heirs) will become responsible for repayment of the loan plus interest accrued.
  • Financing fees of the reverse mortgage can be rolled into the loan.
  • When the loan (cash advances, loan interest charges and any financing costs that were rolled in) is paid off, if the amount owed on the reverse mortgage is less than the home is worth, then you (or your heirs) pocket the difference.
  • Your loan balance will never exceed the value of the home, even if the total value of cash advances exceeds that value.
  • Heirs are NOT responsible for the repayment of a reverse mortgage loan; however, they have several options available to them. They can sign the deed over to the lender and just walk away; or, they can sell the home, pay off the loan and keep any remaining money; or, heirs can purchase the home for the amount owed or 95% of the appraised value – whichever is lower.

How Much Money Can You Get?

The amount of money you receive will depend on the type of reverse mortgage plan or program and the type of cash advance (see “How Reverse Mortgages are Paid Out” below).

Some reverse mortgages cost a lot more than others to process and maintain, which will reduce the amount of money available to you. Dollar amounts available to you can also be impacted by closing costs and interest rates. It’s a good idea to shop around to get the best deal for your situation.

Within each loan program, the amount of money you can receive often depends on your home’s value and your age:

  • The more equity you have in your home, the more money you can get
  • The older you are, the more money you get

How Reverse Mortgages are Paid Out

Once you are approved for a reverse mortgage, the money you receive can be paid out to you in several ways depending upon the kind of loan (see loan types below) and the terms of the loan.

  • You may receive all of the funds available to you in one lump sum at the time of closing. Lump sums are available with a fixed or adjustable rate loan.
  • You may receive a monthly distribution for the rest of your life or for a set period of time. This type of loan payout is only available with an adjustable rate loan.
  • You could receive a “line of credit” account from which you withdraw funds whenever you wish until you reach the limit of funds available to you. Any available funds remaining in the line of credit will continue to increase in value over time. The line of credit account is only available with an adjustable rate loan.
  • A combination of these payment methods. This method of payout is available as an adjustable rate loan.

A line of credit account offers an attractive benefit, in that the amount of money available to you increases over time. For example, if your line of credit equals $250,000 and you withdraw $25,000. That leaves $225,000 which will grow. A year later, that $225,000 increases by the equivalent rate being charged on the balance of your loan. If that rate is 6% per year, then that $225,000 becomes $238,500.

A line of credit account will give you a lot more total cash in the long run. It grows every month as long as you have any remaining balance in the account – until you withdraw all funds available to you.

Types of Reverse Mortgage Loans

There are three main types of reverse mortgages:

  • Federally-Insured Reverse Mortgage (HECM)
  • Single-Purpose Reverse Mortgage
  • Proprietary Reverse Mortgage

Let’s look at each of these in more depth.

Federally-Insured Reverse Mortgage (HECM)

The Home Equity Conversion Mortgage (HECM) is the only reverse mortgage that is insured by the federal government through the Federal Housing Administration (FHA). Based on your age and your home’s value, the FHA informs HECM lenders how much they can lend to you. The FHA guarantees that the lender meets their obligations and the HECM program limits your loan costs.

When it comes to reverse mortgages, HECM loans generally give out substantially more cash and are also more flexible in how the cash is paid to you. The money you receive from a HECM loan can be used for any purpose.

The HECM program offers the most cash advance options:

  • A single lump sum at closing
  • A monthly cash advance for as long as you live in your home (“tenure” plan) or for a specified period of time (“term” plan)
  • A line of credit account of a specified dollar amount from which you withdraw funds whenever you wish until you reach the limit of funds available to you
  • A combination of these options

The amount of money you can receive through a HECM depends upon your age, your home’s value and current interest rates. The older you are, the more cash you receive; however, if there is more than one owner, the age of the youngest is used to determine the loan amount. Lower interest rates when the loan closes provide you with a greater loan amount.

You will be required to meet with a HUD-approved counselor (by phone or in-person) to discuss the financial consequences of taking out a HECM, analyze your situation and to consider alternatives to a reverse mortgage.

Single-Purpose Reverse Mortgage

A single-purpose reverse mortgage, sometimes referred to as a deferred payment loan (DPL), is offered by many local and some state government agencies. Unlike a HECM, a single-purpose reverse mortgage can only be used for improving and repairing your home and is disbursed as a one-time lump sum.

Single-purpose reverse mortgages are not available everywhere, and they can be hard to find, in part, because they go by so many different names. If you want to take out a single-purpose reverse mortgage, and cannot readily find a lender, contact the following agencies to help you locate a lender:

  • Area agency or county office on aging
  • City or county housing department
  • Community action or community development agency
  • State housing finance agency

These agencies may offer single-purpose reverse mortgages themselves, may know who does if they do not, or may be able to offer other low-cost home repair loan options.

Single-purpose reverse mortgages:

  • Are to be used for specific repairs allowed by the program providing the loan – many only cover the costs to improve energy efficiency and accessibility of the home
  • Are generally low cost – they typically have no origination fee or insurance premium, minimal closing costs, very low “simple” interest rates (no interest on interest)
  • Are generally limited to homeowners with moderate to low incomes
  • May place a limit on the home’s value
  • May lend only to a home located in a defined area
  • May have a disability requirement
  • May place a minimum on a borrower’s age

A single-purpose reverse mortgage may be able to be combined with a HECM if the single-purpose reverse mortgage lender agrees to be repaid after the HECM is repaid.

Some single-purpose reverse mortgages forgive all or part of the loan if you live in your home for a specific period of time, which means you may never be required to pay anything back.

Proprietary Reverse Mortgage

For those whose home values are greater than HUD’s limits allow, a proprietary reverse mortgage, sometimes called a jumbo reverse mortgage, may provide a larger cash disbursement which can be used for any purpose. Proprietary reverse mortgages are offered by and generally backed by:

  • Mortgage companies
  • Banks
  • Private lenders

Unlike HECM loans which can be offered by any lender approved by the FHA, the companies that have “ownership rights” to these products determine who offers their products.

Proprietary reverse mortgages:

  • Are the most expensive type of reverse mortgage
  • Are provided without regard to income
  • May provide greater disbursement amounts

As you shop for loans, be sure to compare all options even if you have a higher valued home. For example, the most widely available proprietary reverse mortgage plan offers a non-growing line of credit. When compared to the HECM loan which is initially smaller, but grows larger over time, you may receive more total cash from the HECM than the proprietary reverse mortgage in certain scenarios.

Protections for Non-Borrowing Spouses

It is advised to have both you and your spouse listed as co-borrowers on a reverse mortgage. If one spouse dies or has to move out for medical reasons, the remaining spouse can continue to live in the home and receive disbursements from the reverse mortgage.

However, if one spouse is younger than 62 when the HECM is granted, that spouse cannot be listed as a borrower. Protections have been set in place allowing the non-borrowing spouse to continue living in the home provided that:

  • The couple were married before the HECM was taken out
  • The spouse was named a non-borrowing spouse in the HECM documents
  • The home is the non-borrowing spouse’s primary residence
  • The borrowing spouse must certify at closing and annually thereafter that they are married to the non-borrowing spouse

Costs of a Reverse Mortgage Loan

Reverse mortgage fees tend to be higher than what you pay on a traditional mortgage. Additionally, loan costs on a reverse mortgage vary from one lender to another, sometimes by a fairly significant amount. The cost of a reverse mortgage depends on the type of loan you choose, how much money you take upfront and the lender.

Not all loans include the same loan costs. This makes the total cost of reverse mortgage loans difficult to understand and evaluate; and, it’s why the federal Truth-in-Lending law mandates that lenders disclose the Total Annual Loan Cost (TALC) on all reverse mortgages.

The TALC is a combination of all reverse mortgage costs into a single annual average rate. The TALC shows just how much the total cost of a reverse mortgage loan can be. TALC disclosures show that these loans are typically most expensive when you live in your home only a few years after closing the deal. Because the start-up costs are a large portion of the total amount owed in the early years of the loan, the short-term TALC rates are higher. But as the years pass, the start-up costs become a smaller portion of the debt and the TALC rate goes down.

The longer you live in your home after receiving the reverse mortgage or the less the home’s value increases, the less expensive the loan is likely to be.

Costs and fees you can expect to pay may include:

  • Origination fee
  • Third-party closing costs
  • Mortgage Insurance Premium
  • Servicing fees
  • Interest rates

Purchasing a New Home with a Reverse Mortgage

The HECM for Purchase is an FHA-insured home loan that allows seniors (62 years or older) to use the equity from the sale of a previous residence to purchase their next primary residence all in one transaction. Regardless of how long you reside in the home or what happens to your home’s value, you only make one, initial down payment towards the purchase.

Benefits include:

  • No monthly mortgage payments
  • Preserves cash
  • Increases purchase power

The HECM for purchase loan is used to:

  • Down-size to a smaller, lower maintenance home
  • Lower cost of living
  • Purchase a home closer to family and friends

With a HECM for purchase loan, you continue to own the new home as long as it’s your primary residence and you meet all loan obligations.

Eligibility requirements include:

  • Youngest titleholder is 62 years or older
  • Purchased home must be the primary residence
  • Purchased home must be occupied within 60 days of closing
  • Must meet financial eligibility criteria as established by HUD
  • Must complete a HUD-approved counseling session
  • The property must meet approved criteria

Right of Rescission

The “right of rescission” is the right (set forth by the Truth in Lending Act) of a borrower to cancel a home equity loan or line of credit or to cancel a refinance transaction within three business days of closing. If you decide you don’t want to go through with the loan, you must do so in writing. You cannot rescind orally in person or by telephone.

If you decide to use the “right of rescission,” it must be written:

  • Using the form given to you by the lender at closing (use overnight delivery with a signature of receipt)
  • Through a written letter (use overnight delivery with a signature of receipt)
  • Sending a fax
  • Sending a telegram

How to Find a Reverse Mortgage Lender

Now that we’ve looked at these top five lenders, perhaps you’d like to check out some others for yourself. Here are a couple links that will help you feel you’ve done everything necessary to find the right reverse mortgage lender for you.

  • ReverseMortgage.org offers a lender locator to help you locate lenders in your state. All lenders are members of the National Reverse Mortgage Lenders Association and are licensed to originate reverse mortgages in the states in which they’re listed.
  • HUD.gov offers listings for FHA-approved lenders for HECMs.

Important Tips Concerning Reverse Mortgages

As we come to the end of our discussion concerning reverse mortgages, here are a few important tips that should be emphasized. These include:

  • Before signing the loan documents, have them reviewed by a lawyer or trusted financial advisor. Make sure all of your questions and concerns are addressed.
  • Read the loan documents carefully, making sure you fully understand all conditions that will cause the loan to become due and payable.
  • If you decide to cancel a reverse mortgage, it must be done within three days and in writing.
  • Once you have completed the application and are given the terms of your loan, be sure to carefully comb through all the fees and fine print. If you notice strange wording that seems suspicious or see charges that don’t make sense, ask about them. According to Investopedia, many mortgage lenders have “junk fees” – fees whose only purpose is to make the company money.
  • Talk to various lenders over the phone to get a feel for their customer service. Then consider getting loan pre-approvals from several of the lenders you feel best about. Lastly, compare each company’s closing costs and interest rates.
  • Those seeking a HECM are required to discuss the loan with a counselor employed by a nonprofit or public agency approved by HUD. This counseling is a great idea for anyone considering any type of reverse mortgage to avail themselves of. Click here to find a HUD-approved counselor.

Shop Around for Rates

This cannot be stressed enough.

The origination fee on a loan pays the lender for preparing your paperwork and processing your loan. This fee can run as high as 2% of the loan. On a $250,000 home, for example, the origination fee could be as high as $5000. Origination fee rates can vary from one lender to another. Some lenders may be willing to negotiate the amount.

The servicing fee pays for what lenders and their agents do after closing. A servicing fee can cost as much as $35 per month. This fee can vary from lender to lender. Over the life of a reverse mortgage, these numbers can add up. Be sure to ask and then shop around for the best rates.

According to the Consumer Financial Protection Bureau, the interest rate can make or break a reverse mortgage … and you won’t know if you’ve got the best deal possible if you don’t shop around.

Is a Reverse Mortgage Right for You?

Only you can answer that question. Some will tell you that it’s too good to be true, and others say they’re a scam. What is true about a reverse mortgage is that it slowly siphons the equity out of your home. If you plan to remain in your home until the end, and you have no heirs, your heirs are uninterested in maintaining the property or your heirs are financially able to repay the loan, then a reverse mortgage can be a no-brainer as a means of obtaining additional retirement income.