5 Important Questions About Reverse Mortgages

By Percy Ihara
Wednesday - March 12, 2008
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By Percy Ihara
Certified Senior Advisor for Financial Freedom

With the introduction of several new product and pricing options, there has never been a better time for seniors to consider a reverse mortgage. In the first half of 2007, the industry has seen a flurry of new, lower priced products that offer greater benefits to the consumer as well as a fixed rate product. This is great news for senior homeowners who have begun considering reverse mortgages - but it can also cause great confusion when choosing the right lender or in choosing the product that will best suit the senior’s needs.

So much rapid change over a short period of time can make choosing a lender and determining the best product a daunting task. However, Financial Freedom, the nation’s largest provider of reverse mortgages, has identified five important questions that prospective borrowers should ask lenders when discussing reverse mortgages.

Are you a member of the National Reverse Mortgage Lenders Association (NRMLA)?

Not all lenders are created equal. NRMLA is the industry’s trade group that requires members to follow a best practices model and code of conduct when working with seniors seeking information about reverse mortgages. Even though reverse mortgages have numerous built-in consumer safeguards to protect seniors, it’s a good idea to select lending organizations with a national presence.

Do you offer access to the full range of Home Equity Conversion Mortgages (HECM) and Jumbo reverse mortgages?

With a range of new products and providers, it can be difficult for consumers to determine if their lender is providing information on the full menu of product options available. Be sure your lender is knowledgeable about the range of HECM pricing options as well as HECM AdvantageTM exclusively from Financial Freedom, which may provide the best option for the HUD product. Among jumbo loans, there is a range of product and pricing options that enable borrowers to tailor the loan to their needs. In either case, if a lender is not providing a wide range of options, the borrower may not be seeing and thus, considering the best choices.

Can I see the full breakdown of costs, fees, and the amortization schedule for all these products?

Every lender should be able to provide a complete breakdown of costs and fees for every reverse mortgage option. Lenders should also be ready, willing and able to take the time to explain all facets of reverse mortgages.

Do you have suitability protocols to ensure I’m getting the best reverse mortgage for me and that I have the opportunity to make an informed decision?

More established lenders will have processes to make sure that borrowers understand their choices and that the appropriate loan product is matched to the seniors’ situation. For example, Financial Freedom was the first lender to require independent counseling for all reverse mortgage products it offers, including proprietary reverse mortgage products.

How long have you worked with reverse mortgages?

The decline in forward mortgage production and the sub-prime collapse over the last year has driven brokers and lenders into the reverse mortgage arena seeking new products to sell. As a result, many new and inexperienced lenders have entered the reverse mortgage market. While greater focus on reverse mortgages is a positive for seniors and the industry, consumers need to be selective and work with lenders who have an established history and thorough understanding of reverse mortgages, as well as the unique needs of seniors. Financial Freedom has been enhancing the lives of seniors by providing financial security and independence for over ten years.

 

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