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Choosing A Mortgage Lender: Are They All The Same?

Issue 47.15

Since a mortgage today has so much oversight with rates and fees; 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?

Today, because we are the only direct lender in Southern Utah that funds and has the ability to service their reverse and forward loans in house it is so critical.  We end up answering more questions from clients that have gone through a broker or credit union on a reverse loan and now they are dealing with someone in another country on a home that they will have so many questions over their lifetimes.

All mortgages whether they are conventional or reverse mortgages are for the most part controlled by the new RESPA and TILA laws as well as all Reverse Mortgages are all 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.    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.  And, because of the low interest rate environment, coupled with how many seniors are having to access their equity during their retirement 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:

Are they a direct lender with HUD?  It is important to understand if your lender has HUD authority to fund and underwrite and service his own reverse mortgages.   Many concerns and questions and circumstances will come up over a retirement that you and your heirs will benefit greatly from having a lender that will be there for you during the duration of your mortgage.  Can you imagine any retirement community that is over 55 and over dealing with issues that cannot be solved locally?

Make sure their fees and interest rates are competitive in the market place and that there are no long term servicing fees and or additional fees during your lifetime.  A lot of times, when dealing with a mortgage broker or credit union the servicer will charge servicing fees after the assume the loan and the fees will accrue with the loan.  Make sure nothing is accruing more than what is simply the loan interest and the MI that is built into the rate.  There should not be any additional servicing fees in today’s market place.

Also, make sure your lender walks through all of your financing and investment advisory options.   A lender that is a Reverse Mortgage Lender only cannot 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.

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.

Brandon Hansen can be contacted at 435-673-4773.

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