With the dramatic increase in senior citizens turning to reverse mortgages as a way to finance their retirements, the importance of having ethical reverse mortgage brokers has increased dramatically as well. Ethical standards for reverse mortgage lenders have been established in the National Reverse Mortgage Lenders Association Code of Conduct, but not all reverse mortgage brokers deal with members of the NRMLA.
What Your Broker Should Tell You
Many people who decide to take a reverse mortgage rely on their reverse mortgage brokers for information about the costs of the process about which an ethical reverse mortgage broker will be forthcoming. Yours should be willing at the very least to tell you the following:
The cost of your application fee may not be refundable, so potential borrowers clarify that in advance. The application fee covers the cost of a home appraisal and a check to determine if the potential borrower is in arrears on any other federally-insured loans.
Closing fees can be added to the loan itself, but if they are, will accrue interest. Some of closing fees are comparable to the closing fees of regular mortgages, but others are strictly designed as part of the reverse mortgage process. The origination fee and continuing loan servicing fees will differ widely among reverse mortgage lenders.
At the loans termination, there may be shared equity or value appreciation fees assessed. If so, they will entitle the reverse mortgage broker to a share of your homes residual value.
If you find reverse mortgage brokers hesitant to discuss these fees, immediately see warning signs and look elsewhere. Reverse mortgage brokers who take advantage of the ignorance of prospective borrowers are, unfortunately, far more common than one would like to think.
The sum you will actually receive for your reverse mortgage payment, whether you take it as a single amount, in monthly payments, or as a line of credit, can differ by thousands or tens of thousands of dollars, depending on the abilities and honesty of the reverse mortgage brokers with whom you consult.
Take Your Time
Take the time to shop among reverse mortgage brokers for the lowest fees; if you have family members or friends who have taken out reverse mortgages, ask them about their experience and whether they are satisfied with the performance of their reverse mortgage broker; if there are senior citizens advocacy groups in your community, find out whether they can recommend any reverse mortgage brokers.
Make sure your reverse mortgage broker finds the loan which is right for your needs; you have the right to a retirement as worry-free as you can make it!