When used wisely, a reverse mortgage can be a powerful tool for enhancing your retirement.  However, choosing the right reverse mortgage lender is key to ensuring long-term financial stability. In this guide, we’ll explain how HECM lenders are rated and how online reviews help paint a clearer picture of their reliability.

To make your decision easier, we’ve compiled a list of the top 20 reverse mortgage companies across the nation, along with five essential tips for selecting the lender that’s right for you.

5 Essential Tips for Choosing the Right Reverse Mortgage Lender

1.  Work with a Lender Who Understands Your Needs

It’s crucial to work with a reverse mortgage lender who truly understands your individual needs and long-term goals.  A knowledgeable lender won’t just focus on one aspect, like lower fees, but will look at the whole picture—helping you find the most suitable program for your unique circumstances.

For instance, while one lender may offer a slightly lower appraisal fee, saving you a small amount upfront, they might also provide less overall loan value or higher interest rates, which could cost you thousands more in the long run.  A good lender will take time to evaluate your situation, ensuring you choose the reverse mortgage plan that best supports your financial goals and helps you make the most of your home equity.

2.  Carefully Review Online Customer Feedback

Reading what other customers say about reverse mortgage lenders online is a good idea.  But be cautious about where these reviews come from.  Some websites that help find customers for these companies might not have honest reviews, as money can influence them.

Instead, look for reviews on reliable sites like the Better Business Bureau (BBB) or Google Ratings.  Real customers write reviews on these sites, and lenders can’t change them.

Pay attention to any issues that keep coming up in the reviews.  If you see the same problems mentioned repeatedly, avoiding those providers is best.  Remember, this loan is for your benefit, not the lender’s.  The best reverse mortgage for you is one that fits your specific situation.

What works for some might not be right for you.  At All Reverse Mortgage, our goal is to give you all the information you need to make a choice that truly fits your needs rather than just selling you a loan.

3.  Compare All Loan Details, Including Margins and Closing Costs

When considering a reverse mortgage, it’s important to compare all aspects of the loan, not just the fees.  By law, lenders can’t add extra charges to 3rd party fees such as appraisals, title fees, and credit reports.  Lenders can only charge what those services actually cost.

One thing you should pay attention to is the lender margin.  A higher lender margin means you could end up paying a lot more in interest over the years, and you might get less money from the loan.

Here’s something else to consider: the Upfront Mortgage Insurance Premium (UFMIP) is usually 2.0% of your home’s value, up to a maximum home value of $1,149,825.  So, the highest UFMIP could be as much as $21,786.  Some loan options might let the lender cover some or all of this cost, saving you money upfront.

That’s why it’s important to compare different loans and see which is best for your situation. Don’t just look at the fees; consider how the loan performs over time.

4.  Make Sure Your Lender is HUD-Approved

For your protection, verify that your chosen lender is approved by the U.S. Department of Housing and Urban Development (HUD).  You can easily check their approval status by visiting the HUD website and using their Lender List Search tool.

5.  Avoid Lenders Who Have Their Own Appraisal Services

It’s best to avoid lenders that use their appraisal services, as this may limit your options and affect the objectivity of your home’s value.  Shop around, compare quotes, and ensure the loan officer and the company have the proper qualifications and licensing.

Frequently Asked Questions (FAQs)

Summary: How to Choose the Right Reverse Mortgage Lender

Reverse mortgage lenders use various methods to reach out to you.  Here’s how to make a wise choice:

• Look at Independent Reviews and Offers: Don’t just go by ads.  Check independent reviews and compare offers.
• Choose HUD-Approved Lenders: These are usually direct lenders, saving you time and money.
• Check for NRMLA Membership: Ensure the lender follows NRMLA code of ethics.
• Avoid High-Pressure Sales: Avoid lenders who pressure you into quick decisions.
• Get Independent Counseling: Counseling helps you understand your options and ensure a reverse mortgage is right for you.

Information for Past Customers of Inactive Companies

ARLO recommends these helpful resources: 

• • Search for a lender by State or City 
  • Search for lenders by NRMLA – (National Reverse Mortgage Lenders Association)