Find information on the top reverse mortgage lenders across the nation. Search the online database of reverse mortgage lenders for information about reverse mortgages, the mortgage lenders offering these loans and the various terms and rates available.
A reverse mortgage is a special type of home loan for older homeowners that require no monthly mortgage payments. Reverse mortgages allow seniors to access the equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home.
The range of products offered, the structure of the reverse mortgage market, and the consumers who use reverse mortgages have all changed dramatically over time. Before choosing a reverse mortgage, consumers should carefully evaluate whether this home loan option or another product or course of action would allow them to achieve their financial goals.
Nearly all reverse mortgages today are insured by the Federal Housing Administration (FHA) through its Home Equity Conversion Mortgage (HECM) program. HECM reverse mortgage borrowers have several options as to the structure of the MIP, the interest rate type, and the way that they receive their loan proceeds.
Finding the right reverse mortgage and the right reverse mortgage lender just takes a little knowledge and a little time to compare the options available. Consumers can use the list of the top ten reverse mortgage lenders in the market to talk to a licensed reverse mortgage lender for more information.
The top ten reverse mortgage lenders in the US:
AAG Reverse Mortgage
Liberty Home Equity Solutions
Rancho Cordova, California
Security One Lending
San Diego, California
One Reverse Mortgage
A Quicken Loan company
San Diego, California
UFA – Urban Financial Group
Reverse Mortgage USA
Sun West Mortgage
Cherry Creek Mortgage
1st Reverse Mortgage USA A Division of Cherry Creek Mortgage
Greenwood Village, Colorado
Reverse mortgages are a viable option for many senior homeowners however, these home loans have also led to problems and difficulties that some reverse mortgage borrowers failed to appreciate prior to consummating the transaction. By taking a quick look at some of the pros and cons of the reverse mortgage products, potential borrowers can obtain a better understanding of these home loans and sidestep and potential pitfalls down the road.
Reverse Mortgage Pros and Cons
The Advantages of a Reverse Mortgage:
A reverse mortgage allows the borrower to obtain the proceeds of the loan, whether it is to pay off existing mortgage debt or for other worthwhile purposes, and the borrower can stay in the home without making any monthly mortgage payments. Payments for homeowners insurance, real estate taxes, and general maintenance will be required but there are no required payments on the reverse mortgage.
With a reverse mortgage the borrower will never owe more than the home’s value at the time the loan is repaid, even if the reverse mortgage lender has paid out to the borrower more money than the value of the home. The heirs of the borrower are not personally liable if the payoff balance exceeds the home’s value. The heirs of the homeowner may in fact inherit any remaining equity after the balance of the reverse mortgage is paid off.
There are no income or credit qualifications to obtain a reverse mortgage with some limitations regarding the borrower’s ability to pay the real estate taxes, insurance and maintenance for the property.
Distributions from the reverse mortgage to the borrowers can be very flexible. A reverse mortgage borrowers can receive the funds in a lump-sum payment, monthly payments, as a line of credit or in a combination of these options.
The distributions from the reverse mortgage proceeds are generally made as tax-free disbursements. However it is always best to consult a tax or financial professional regarding these matters. There are also no restrictions on how the borrower may use the funds from a reverse mortgage.
The Disadvantages of a Reverse Mortgage:
Some consumers may be better off not taking a reverse mortgage and instead pursuing an alternative course of action to help fund their senior living expenses. Reverse mortgages are not the only option for accessing home equity without selling a home.
While reverse mortgages do not require monthly mortgage payments and offer several important financial protections, there are higher costs for obtaining this type of loan.
Many borrowers do not adequately consider how long they will stay in their home when they take out a reverse mortgage. Most borrowers typically do not live in their current homes until the end of their lives. Reverse mortgage borrowers are increasingly taking the full amount for which they qualify for upfront as a lump sum with the interest on the loan chipping away at their remaining home equity over time.
Reverse mortgage borrowers appear to be increasingly using their loans as a method of refinancing traditional mortgages rather than as a way to pay for everyday or major expenses. Some borrowers may simply be prolonging an unsustainable financial situation.
Some reverse mortgage borrowers do not properly budget their future housing expenses and are at risk of foreclosure due to nonpayment of taxes and insurance which is a requirement with these loans.
Spouses of reverse mortgage borrowers who are not themselves named as co-borrowers are often unaware that they are at risk of losing their homes. If the borrowing spouse dies or needs to move, the non-borrowing spouse must sell the home or otherwise pay off the reverse mortgage at that time.
Since a reverse mortgage loan is due if the borrowers home is no longer their primary residence and the upfront closing costs are typically higher than other loans, it is not a good tool for those that plan to move soon to another residence. It is possible the principal balance of the reverse mortgage will exceed the market value or sales price of a home at any given time during the loan term.
Reverse mortgages are a special type of home loan designed for borrowers 62 years of age or older. Reverse mortgages allow a homeowner to utilize the equity in their home to refinance or extract cash without the burden of monthly payments. These home loans are the reverse of traditional mortgage loans in which the borrowers makes preset payment amount to repay the loan. With a reverse mortgage, there are no monthly payment obligations.
Unlike traditional mortgage loans that have predetermined monthly payments, the homeowner’s obligation to repay a reverse mortgage is deferred until the owner dies, the home is sold, or the owner leaves the property. With a reverse mortgage, the borrower is not obligated to make monthly mortgage payments for as long as they stay in the home. The reverse mortgage loan is repaid only after the borrower permanently leaves the home.
With a reverse mortgage, homeowners can choose how they want to use the equity in their home as either a fixed monthly payment, a one time distribution, a line of credit or a combination of those options.
The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM) which is an FHA mortgage loan offered by FHA approved mortgage lenders. With an HECM reverse mortgage loan there are different options on the interest rate, how much money that is made available to the borrower, and how the payments to the borrower are made. HECM reverse mortgages can be based on variable interest rates or fixed interest rates.
The mortgage lender that makes the reverse mortgage will recover the principal amount borrowed, plus accrued interest, when the home is sold. After the property is sold, if there is a remaining value after the reverse mortgage is paid off, the home or the remaining value goes to the borrower or their heirs.
In situations where the sales proceeds of the home are not sufficient enough to pay the reverse mortgage amount owed, with the FHA reverse mortgage, the mortgage lender will be paid in full by the FHA. FHA collects an insurance premium from all reverse mortgage borrowers in order to provide insurance coverage for loss of principal and interest to the mortgage lender.
In order to obtain an FHA insured reverse mortgage the borrower must be 62 years of age or older, occupy the property as your principal residence, not be delinquent on any federal debt, complete a counseling session given by an approved HECM counselor.
The loan amount for the reverse mortgage is based on the existing mortgage amount on the property, the age of the reverse mortgage borrower, the current interest rate and the lesser of the appraised value or the HECM FHA reverse mortgage limit.
Since there is no repayment schedule with these home loans, there are no income or employment qualifications requirements for the reverse mortgage borrower. The FHA reverse mortgage HECM does not require repayment as long as the home is your principal residence and the obligations of the mortgage are met.