You’ve made the decision to pursue a reverse mortgage, and now you’re meeting with a loan officer for the first time.  Though you may understand the basics of a reverse mortgage, there are certain questions you may want to bring with you for your first meeting to clarify some of the details that could potentially catch you off guard down the road.

meeting with loan officer

Here are 6 questions to address in your first meeting with your reverse mortgage loan officer:

1.  How do I get counseling?

Scheduling your counseling session is an important step in the process of applying for a Home Equity Conversion Mortgage (HECM).  The U.S. Department of Housing and Urban Development mandates HECM counseling to ensure applicants are fully informed about the implications and details of reverse mortgages.

You’ll find HUD-approved counseling agencies across the nation equipped to offer guidance.  While many agencies provide the option for telephone counseling, be aware that certain states mandate face-to-face sessions.

The cost of HECM counseling can differ based on various factors and might be waived for individuals who meet specific income criteria.  Your loan officer is a valuable resource for obtaining a comprehensive list of certified HECM counselors.

However, they are prohibited from endorsing any particular counselor.  This impartial approach ensures you receive unbiased, informative counseling suited to your financial situation.

2.  How much can I qualify for?

Determining your eligibility for a reverse mortgage involves evaluating various key factors, including your age, the value of your home, and current interest rates.  It’s important to note that older applicants with substantial home equity can typically qualify for larger amounts.

Your loan officer plays a crucial role in this process, offering personalized assistance to evaluate your unique circumstances.  This tailored approach ensures that you clearly understand how much you can qualify for, helping you make informed decisions about your reverse mortgage options.

3.  What are my payment options?

Exploring your payment options in a reverse mortgage is essential, as each choice has its benefits and drawbacks, largely depending on your financial needs and how you plan to use the funds.  Whether you’re considering a reverse mortgage as a safety net or need immediate access to funds will significantly influence your decision.

Your options include a line of credit, tenure payments, term payments, a lump sum, or a combination.  With a line of credit, you can withdraw funds according to your needs within a specified limit, especially during the first year.

Tenure payments offer a steady income for the duration of the loan, while term payments provide consistent payments over a fixed period.  The lump-sum option delivers all your funds upfront, subject to first-year withdrawal limits.

It’s essential to discuss each of these options with your loan officer to understand how they align with your financial landscape.  They can provide detailed insights into how each choice would impact your situation, helping you confidently navigate your reverse mortgage journey.

Also See: Reverse Mortgage Payment Options: Term, Ten Year & Tenure Explained

4.  Are there any restrictions on the money once the loan is closed?

Since October 1, 2013, regulations have imposed a cap on the initial withdrawal from your reverse mortgage proceeds during the first year.  After determining your eligibility and the total amount you qualify for, you can access up to 60% of your initial principal limit in this period.

This limitation encourages a strategic approach to accessing your funds.  If you do not need the money, considering alternative payment options might prove more advantageous.  This strategy allows for a more measured use of your reverse mortgage funds, potentially preserving your financial stability over the longer term.

5.  What kind of fees can I expect to pay?

When finalizing your reverse mortgage loan, it’s important to be prepared for various potential fees incurred at closing.  Discussing these fees in detail with your loan officer is important to ensure transparency and avoid surprises.

The range of possible fees can include, but is not limited to, the costs associated with loan closing, mortgage insurance premiums (MIP), mandatory HECM counseling, home appraisal fees, credit report charges, document preparation fees, lender’s title insurance, and notary services.

6.  What happens if I die?

Should you pass away with an outstanding balance on your reverse mortgage, the responsibility of settling the loan falls to your heirs.  Usually, this obligation is fulfilled by selling the home.

Importantly, your heirs are safeguarded against any shortfall should the sale proceeds not cover the full loan balance; they will not be liable if the loan amount surpasses the home’s value at the time of sale.  This is due to the non-recourse protection of the program.

Addressing this and other pertinent questions with your loan officer during your initial meeting can significantly mitigate future uncertainties and stress.  It’s an essential step in ensuring that you and your loved ones are fully informed about the implications of a reverse mortgage.

Loan Officer FAQs

Q.

What qualities of a loan officer should I look for when investigating a reverse mortgage?

The most important qualities of a loan officer to look for when investigating a reverse mortgage are honesty and knowledge.  The reverse mortgage loan is a complicated financial instrument, and your loan officer must be knowledgeable about the ins and outs of the reverse mortgage process and the loan itself and be honest with you on the pros and cons of a reverse mortgage.

Q.

Are reverse mortgage loan officer license requirements any different from others?

The license requirements for a reverse mortgage loan officer are almost identical to the license requirements of loan officers offering other loan products.  The only difference tends to be that in certain states, there are additional bond requirements for reverse mortgage loan officers.

Q.

Can a reverse mortgage loan officer steer me into the wrong program for their commission?

When it comes to adjustable-rate lines of credit plans under reverse mortgages, particularly those that are open-ended, there’s a heightened risk of borrowers being steered towards options that benefit the loan officer at the borrower’s expense.  These plans are exempt from specific regulations set forth by the Dodd-Frank Wall Street Reform and Consumer Protection Act, giving brokers more leeway to increase the margin and, consequently, their commission without the strict restrictions that apply to fixed-rate products.

Q.

Where can I check the reputation of a loan officer and their organization?

The best place to check the reputation of a loan officer and their organization is with the Better Business Bureau. Most review sites, including the Better Business Bureau, are usually focused on the organization rather than the individual loan officer.
Q.

Where can I file a complaint about a reverse mortgage loan officer?

The best place to file a complaint about a reverse mortgage loan officer is with the state agency responsible for the licensing oversight.  If you go to the NMLS (https://www.nmlsconsumeraccess.org/) and search for the loan officer, you can see all their state licenses.  If you click on the state you reside in, it will take you to the state agency’s website to make contact and file a complaint.

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