Issue 37.14
Since a Reverse Mortgage is FHA and or HUD insured does it matter which lender I choose? I get this question asked on a weekly basis. That is like saying, because every bank is FDIC insured, does it matter which bank I have my account with?
All reverse mortgages are, for the most part, HUD insured today. A few years ago, FHA stepped in and really regulated the industry to a point where 99% of all reverse mortgages are FHA insured or HUD backed. In the past, you would hear horror stories of banks or lenders creatively coming up with ideas that would benefit the lender as much as or more so than the client. Because of this, we as lender’s today are constantly fighting the old negative connotations of a reverse mortgage that are still with many today.
FHA has regulated these loans carefully over the past few years, and before they did, there were a lot of practices in the loans that did not make sense, including sharing of equity and interest rate variances etc. Today, these are not relevant in the FHA insured Reverse Mortgage. And, because of so, they have opened up the loans to be more available in order to purchase a home and simply eliminate a current mortgage. Because of the low interest rate environment, coupled with how many seniors are having to access their equity during their retirement, this has led to a senior retirement population that has taken advantage of the reverse loan more so than ever before.
When, you are looking at a lender, there are a few things to truly consider:
1. Are they a direct lender with HUD? It is important to understand if your lender has HUD authority to fund and underwrite their own reverse mortgages. You want to understand that they have and can service your loan during your retirement. Many questions and circumstances will come up and you and your heirs will benefit greatly from having a lender that will be there for you during the duration of your mortgage.
2. Make sure their fees and interest rates are competitive in the marketplace and that there are no long term servicing fees and or additional fees during your lifetime.
3. Also, make sure your lender walks through all of your financing and investment advisory options. A lender that is a Reverse Mortgage Lender can look at your situation from a financial planning point of view and run side by side comparisons with a conventional loan or any other type of equity loans that could be considered under your particular situation.
4. Is your lender a Registered Investment Advisor? Is my lender looking at my situation again like above, from a financial planning perspective. Not only is this the right loan for me, but how and what option could I maximize my particular needs with this loan the best?
Choosing a Reverse Mortgage Lender today is as important as any piece of your retirement planning. It is critical to make sure that the loan not only fits you but which option of disbursement is best and that you and your family have a contact and a lender that will be with you during your retirement. A Reverse Mortgage is not right or a fit for everyone, so talk to your licensed financial planner or Mortgage Planner to understand if it is a right fit for you.
Until next time, Brandon Hansen.
Brandon Hansen is Senior Mortgage Banker and Registered Investment Advisor Representative for Cherry Creek Mortgage/Investment Advisors International and can be contacted at 435-668-2840/435-674-9200, or visit the website at www.cherrycreekutah.com