We can’t really have a discussion about “How to choose a reverse mortgage originator” without also considering what to look for when shopping for the right reverse mortgage lender.
For the most part, these two entities go hand-in-hand.
As I stated in part 1 of this topic, originators represent a particular lender and are the “liaison” that guides you as the customer through the whole reverse mortgage process, making sure you’re prepared at every turn.
What is equally as important as determining who best “fits” your financial goals as an originator is what lender offers the types of products, programs, and operates in a fashion that will best fit your particular set of circumstances.
While it might seem like all reverse mortgages lenders are basically the same, this couldn’t be further from the truth.
Just like different car dealerships that may sell the same type or brand of car, each lender has a different style of operation, different processes, and different people who work for them.
This amounts to a situation where in order to make sure you get the peace of mind you’re looking for in a financial partner, you will have to “interview” different lenders and learn more about their business to make an informed and beneficial choice.
For most, you will likely select a reverse mortgage originator who you “click” with and go forward doing business with the lender they represent.
There are those of you out there though who may like to take some time to crunch the numbers and shop the available reverse mortgage lenders out there first and then select an originator associated with them afterword.
To this end, I will take some time in today’s article to go over the ins-and-outs of lender selection and more specifically, what questions to ask as well as what information will be important to consider during your vetting process.
The goal when researching these reverse mortgage lenders shouldn’t be to simply find who is offering the best “deal”, but rather to find those nuggets of information that speak to you as a potential borrower who is looking to satisfy a specific financial need.
So, now that you’re front-loaded with all of that, let’s take a look at reverse mortgage lenders…
What Should I Know About My Reverse Mortgage Lender?
I’ve found that for ease of reading and in case you would like to print this page out and use it as a shopping resource, it’s best to tackle these types of topics in list format.
When researching potential reverse mortgage (or HECM) lenders you will want to answer the following queries:
- First of all, is the outfit you’re dealing with a broker or the actual lender?
- As you may well be aware of, in the mortgage industry, there are those who sell loans for lenders and the banks that actually lend the money.
- Direct lenders will work to find you a reverse mortgage product within their own portfolio that fits your financial profile and satisfies your goals so that they can develop a mutually beneficial relationship with you.
- Brokers, on the other hand, may have a myriad of lenders they deal with and will likely source mortgage products from various banks to help you find the best deal on your reverse mortgage.
- Knowing which reverse mortgage provider to do business with can be a real challenge – that’s why it’s important to develop a relationship early on with a good reverse mortgage originator who can advise you on which way to travel on your journey ahead.
- Are there any risks associated with the lender’s reverse mortgage products?
- This is in part a test of honesty – all reverse mortgages have conditions and caveats that need to be considered and ultimately adhered to by the borrower.
- A solid, reliable lender will make you aware of all the possible risks associated with any of their products early in the process so that you’re properly informed well before you make the choice to do business with them.
- It’s important to get involved with a firm that will honestly assess whether you will qualify for certain programs in advance rather than simply throwing your application on the pile and hoping something sticks, wasting your time and ultimately, your money.
- Is the lender a member of the National Reverse Mortgage Lenders Association (NRMLA)?
- This is key as it is incumbent upon lenders that are members of this organization to conduct reverse mortgage business, “in an ethical, professionally responsible, and lawful manner.”
- The association provides member-lenders with guidelines that they must follow to make sure that they are representing their clientele in the best manner possible so that the integrity of the industry is maintained.
- You can check to see if the lender you’re considering is a member using the NRMLA search tool located here. Accessing this site will allow you to find a lender in your state as well as the contact information of employees you can reach out to for more information.
- Are you dealing with a small, local lender or a large, multinational lender?
- This really is a matter of preference for most folks. Some people feel safe and secure dealing with a large entity that handles tons of transactions and represents billions of dollars in business. Others prefer the more hands-on approach that a smaller lender with fewer clients has the ability to provide.
- Fees can also vary depending on the size and scope of practice that lenders of different sizes maintain in order to manage their day-to-day operation and management of your account.
- Does the lender offer FHA (Federal Housing Administration) insured HECM loans?
- For the most part, almost all reverse mortgages today are FHA backed loans. This means that if for some reason, your lender goes out of business, your loan will not be affected. You will still receive the proceeds as agreed-upon in your loan contract.
- However, it’s important to make sure that you’re dealing with a shop who isn’t trying to steer you towards a product that isn’t government insured or backed by an agency that will make sure your money isn’t lost.
- You can reference the HUD website to see if your prospective lender is approved to offer these programs by utilizing their search tool here.
- How long has the lender been offering reverse mortgages and/or been in the mortgage business?
- This may or may not be a big deal for some, but knowing the answer to this question could give insight in the lender’s history and business dealings.
- It could shine light on information about:
- The lender’s success rate helping clients get reverse mortgages.
- The lender’s level of customer service.
- The lender’s ability to offer products and services in-line with your financial goals.
- The lender’s experience level with processing reverse mortgages.
- The lender’s history of conducting reputable business in the industry.
- If you’d like to follow up on any of these concerns, you can research your potential lender’s history at the following websites:
Am I Ready to Choose a Reverse Mortgage Lender?
At this point, if you’ve read part 1 on this topic regarding reverse mortgage originators and taken the time to research reverse mortgage lenders utilizing the suggestions above, you’re well on your way to making an extremely informed decision about who to do business with.
Remember though, no research project is complete without consulting professionals with experience in the field.
It’s also a very good idea to touch-base with those who will be affected by your decisions – family, friends, colleagues, etc.
Even if time isn’t a luxury you have, doing work on the front-end of an endeavor such as taking out a HECM loan will save you loads of time on the back-end of the deal.
You never want to rush decisions like these without making absolutely sure that you’ve educated yourself on all possible options that might benefit you and your family.
Most importantly, you want to make sure that your financial decisions take you to a place of comfort and security, not stress and fear.
There’s no doubt that shopping for a reverse mortgage can be a tall order, but remember that experienced reverse mortgage originators such as me and my colleagues are here to help you make the transaction as pain-free as possible.
If at this point, you’d like to get the ball rolling or if you simply have some questions, please feel free to contact me anytime by calling (972) 803-3073 or simply click on the link below and I’ll follow-up with you as soon as possible and help get you on the right track to living your ideal financial future.