Best Reverse Mortgage Companies of 2022

Reverse mortgage lenders typically offer FHA-backed HECMs, but they all might not provide the same level of service, so consider the following factors:

Professional Credentials

Dealing with a third party can be time-consuming and expensive, so you should work directly with the reverse mortgage lender. Ensure that the lender is approved by the Federal Housing Administration (FHA) and the Department of Housing and Urban Development (HUD).

Verify that they adhere to the FHA and HUD guidelines and standards by searching the HUD lender’s list. Also, inquire if they are members of the National Reverse Mortgage Lenders Association (NRMLA). The association has strict ethics that members should follow.

Interest Rates and Fees

As with any mortgage, you will pay interest and other fees. While mortgage insurance premiums (MIP) are the same across all lenders, origination fees, interest rates, closing costs, and service fees vary by company.

• Interest rates - Interest rates take a significant share of the total cost of your loan and change based on the lender and loan option. Depending on your financial objectives, you can choose a fixed or adjustable rate. A fixed interest rate remains constant over the entire duration of the mortgage. You can predict how much interest will accrue. An adjustable-rate fluctuates based on the underlying market index and margin rate. You may not estimate accrued interest. Though our documentation will specify how often the rate can change. Select a lender that offers competitive interest rates to save on money over the loan period.
• Origination fees - Origination fees are the costs of processing your loan. For HECMs, a lender can charge the greater of $2500 or 2% of the first $200,000 of the value of your home. If the value exceeds $200,000, you are charged an additional 1% of the amount that surpasses. The cap is $6000. You can also search for lenders who waive or reduce the origination fees for some products.
• Closing costs - You can expect to pay a range of closing costs that include; recording fee, survey fee, title fee, insurance fee, and flood certification fee, just to mention a few. You can roll the costs into your reverse loan amount or pay the cost upfront.
• Service fee - This is a monthly fee charged by the lender for managing your loan. Look out for lenders who will cut out or offer rebates for the monthly service fee. Ask each lender for a written estimate of origination fees, service fees, and closing costs. The costs and fees should be clearly stated, with no hidden expenses.

Loan Options

Some of the best reverse mortgage companies offer borrowers a variety of loan options making it easier to take on a type of loan that is tailored to your needs. There are three kinds of reverse mortgage loans.

Types of Reverse Mortgages

• Single purpose reverse mortgage - Backed by the state, non-profits, or local government agencies, single-purpose reverse mortgages provide funding for a particular lender-approved item, such as paying property taxes or doing necessary repairs. They are the cheapest non-recourse loans if you have a low to moderate income and can't qualify for other reverse mortgage loans. However, they are not available in every state.
• Home equity conversion mortgage (HECM) - The federal government insures HECMs. HECM reverse mortgage loans are the most common because they don't have income restrictions. To qualify, you should be at least 62, have the property as your primary residence, and pay your real estate taxes and homeowners insurance. Standard HECM loans allow you to cash out your equity for any purpose, while HECMs for purchase let you use the loan proceeds to purchase a new house. You can also refinance your reverse mortgage to borrow more if the FHA loan limits in your area increase significantly.
• Proprietary reverse mortgage (Jumbo reverse loans) - Private lenders back proprietary reverse mortgages. They are a good choice for homeowners whose property's value exceeds the HUD limit, which is $970,800 for 2022. Evaluating yourself is how you begin to truly understand what you need. Are you seeking to clear your existing mortgage balance and purchase a new home? Or do you want to supplement your retirement income? Use the answers to these questions as a guide when comparison shopping for mortgage products to find a lender that offers the home loan you’re looking for. A reverse mortgage lender should provide different mortgage payment options. For a fixed-rate reverse mortgage, you only have the option of a single disbursement lump sum payment. But for an adjustable-rate reverse mortgage, you can choose a tenure, term, modified tenure, modified term, or line of credit payment plan.

Customer Service Rating and Post Loan Support

A company that puts the needs of its customers first and offers top-notch professional services will, in most cases, have good ratings. Conduct background research to get the best-rated lender. Read legitimate customer reviews from sites such as the Better Business Bureau or Consumer Affairs. These third-party sites do not accept sponsored reviews, so you know the reviews are from real users of the company. It is easy to check if lenders have any regulatory violations. Reverse mortgage lenders have the Nationwide Mortgage Licencing System (NMLS) number on their website. Use the search field on the NMLS website to get detailed information on states the lender is licensed to operate and regulatory violations if any. Some reverse mortgage lenders also sell loans to third parties. Most of the time this results in being bombarded with calls and emails. To avoid this, search for a lender who services their loans.