Before deciding on a particular reverse mortgage company, it is important to comparison shop so you can get the best deal possible.
Just like any other loans, knowing what to look for when you are considering reverse mortgages will ensure you that you get the best deal. Even though reverse mortgage is a program that is somewhat new compared to other types of loans, it has already gone through several changes, which is why it is very important to keep abreast of reverse mortgage information.
Factors to Consider
Reverse Mortgage Interest Rates
If you decide that reverse mortgage is the way to go, the first thing you must do is to compare reverse mortgage programs that you will encounter. The first thing that you must do is compare the interest rates being offered by FHA reverse mortgage lenders because even if you will not make mortgage payments to them, it would still be best to get the lowest interest rate as possible. Know that the interest will be taken from your home equity and it would mean that if the interest rate is high, then the equity that you will get will be lower. By getting a reverse mortgage with the lowest interest rate, you will maximize your home equity and you will receive payments longer.
Reverse Mortgage Fees and Other Costs
The next things you should compare are the fees and closing costs that are associated with your loan. All these costs can be taken from the loan itself when you get a reverse mortgage. Most people do not really take the time to look into these details because they think it would do them no harm as long as they do not pay any cash out for such fees. Take note that if you do not get into the detail of the fees being charged to you for loans, it could mean loss of thousands of dollars for you. The fees that are typically charged in loans are origination fee, mortgage insurance, third-party closing costs and maybe even a service fee. When you add up these fees, the total amount is also significant which is why you it would be best if you find a lender that offers the lowest closing cost.
Reverse Mortgage Amount
Another factor to compare is the maximum loan amounts offered by each mortgage lender as there may be a maximum loan amount that you have to deal with depending on the program you are considering to get. There are certain types of reverse mortgage programs that have a maximum amount that can be borrowed and this will also depend on which state you live in. Thus, it is also crucial that you compare the maximum loan amounts for programs so you can get the one that would best suit your needs.
Mortgage Payment Options
Lastly, the payment option available is what you need to compare as well. An example of which is you may be able to receive a monthly payment for the duration of the loan but there are lenders who will provide borrowers with a line of home-equity credit instead of the monthly payment. They are several different types of payment options being offered so you must also decide on getting something that would work best for you.