When people retire, the income they received until that moment will decrease substantially for most of them. This situation forces people to find the best way to replace their monthly income once they retire. With this in mind, many financial professionals recommend older homeowners apply for a reverse mortgage loan. This is a very popular solution, especially in the USA. In fact, there were 11,921 loans in California in 2020, placing this state on top of the list of all US states whose citizens decided to use this option.
However, opting for a reverse mortgage is not the only thing you should think about. You’ll have to carefully choose a suitable reverse mortgage lender, as well. A lender can be a person, private or public group, or financial institution that can make or break the deal for you because you depend on their expertise and guidance. You need to do a thorough market search to be able to find a lender according to your needs.
So, keep reading the following four tips to find out what things you should pay attention to the most when looking for the right reverse mortgage lender.
A lender with great customer service
Great customer service is one of the key elements that describe a good reverse mortgage lender. You need a lender that works ethically and offers best-in-class services, such as answering all your questions honestly and in a detailed manner. A lender with excellent customer service will lead a transparent process with no hidden costs, present you with all available packages, and show great responsiveness to your needs.
When you think you have found the right one, before you start the application process, talk with the company’s reverse mortgage advisors for guidance. These advisors will walk you through the entire process and explain how the reverse mortgage process works, how much money you can get, and provide you with the right financial solutions for your situation.
Check their professional credentials
When you are searching for the right reverse mortgage lenders, make sure to check their professional credentials first. You have to check if they have the Federal Housing Administration (FHA) and Department for Housing and Urban Development (HUD) approval. To do that, you can check the regularly updated list of approved reverse mortgage lenders available online and make sure that the lender you chose works according to the FHA and HUD guidelines and rules.
Apart from FHA and HUD credentials, you also have to check the National Reverse Mortgage Association (NMRLA) to see which lenders are active members of this association. The main reason is that an active member of this association follows strict rules, values, and the highest ethical standards, like fairness, confidentiality, integrity, and professionalism.
Ask for their interest rates and fees
No one likes to spend more money than planned, especially not on interest payments and additional fees, which are an essential part of the loaning process. Knowing that the interest rates are a huge contributing factor to the total cost of the loan, finding a lender with affordable interest rates is crucial. This way, you can save a substantial amount of money throughout the entire course of the loan process.
Apart from the interest rates, you have to pay attention to any additional servicing fees, as well as closing costs that the lender may have. But, if you have any doubts about why they ask for additional fees, you can consult with the reverse mortgage advisors and ask them for clarification. So, before you make any final decision, ask the lender to provide you with detailed disclosures outlining all costs you will have during the loan process.
Find an experienced lender
When you are looking for a lender according to your requirements, make sure you find one with great experience and proper training. A reverse mortgage works differently from a standard one because there are extra rules and criteria that borrowers must meet. The reason is that experienced lenders are familiar with all tips and tricks in the book, and also know all laws and regulations in detail. They have handled thousands of cases like yours, so they will also be able to deal with all complexities and emotions involved in your process.
Final thoughts
Finding the right lender is probably one of the key elements in the entire loan process. So, do thorough research, check if their professional credentials are valid, and ask for the interest rates and fees they charge, but above all, search for an experienced lender with excellent customer service. Finding all of these in one lender group is the recipe for completing a smooth reverse mortgage loan process.
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