Reverse Mortgages Can Help You Access Your Home’s Equity in Retirement — Here Are the Best Lenders
A reverse mortgage can be a valuable tool for retirees looking for additional income without having to make monthly mortgage payments. These loans allow homeowners to borrow against the equity in their homes, receiving funds either in lump sums, monthly payments, or a line of credit.
The advantage of a reverse mortgage is that you are not required to make monthly payments on the loan. Instead, the loan accrues interest and the outstanding principal is repaid only when the home is sold or you no longer use it as your primary residence. This flexibility can be beneficial for those who have limited income or want to preserve their monthly cash flow.
However, it is important to understand that reverse mortgages are not without their drawbacks. The interest can accrue quickly, and if you do not have a plan to repay the loan, you could end up owing more than your home is worth. It’s also crucial to factor in the closing costs and origination fees when calculating the true cost of this type of loan.
Key Takeaways:
- Reverse mortgages can provide financial flexibility for retirees by allowing them to access their home equity without needing to make monthly mortgage payments.
- However, reverse mortgages come with risks, including high interest rates and potential for owing more than the home is worth.
- It is essential to weigh the potential benefits and drawbacks before deciding whether a reverse mortgage is right for you.
Reverse Mortgage Lenders: Who’s Right for You?
To help you find the best fit for your unique needs, we’ve compiled six top reverse mortgage providers. Each lender boasts its own strengths, from customer satisfaction and ease of application to unique loan options and helpful resources.
Let’s dive deeper into the details of each provider:
Best for a Variety of Loan Options
Finance of America Reverse (FAR)
Finance of America Reverse (FAR) stands out for its varied loan offerings, offering both HECM (Home Equity Conversion Mortgage) loans and proprietary products like HomeSafe Standard, HomeSafe Second, and EquityAvail. These diverse options cater to different needs and financial situations, allowing applicants to find a solution that aligns with their individual goals.
Standout benefits:
- Wide range of loan options: This gives you the flexibility to choose the loan that best suits your unique situation.
- Tailored customer service: FAR provides specialized support for each loan type, ensuring that borrowers receive specific guidance and assistance.
- Customer concierge service: Borrowers can reach out for help via phone or email at any time.
- Educational resources and calculator: FAR’s website offers online tools to learn about reverse mortgages and estimate loan costs.
Who’s This For?: If you desire a lender offering various options and personalized support, FAR is a great choice.
Pros:
- Available nationwide
- Variety of loan options
- High customer satisfaction ratings
Cons:
- No online application available
- Not transparent about rates and fees
Best Brick-and-Mortar
Mutual of Omaha Reverse Mortgage
Mutual of Omaha is a reputable name in the financial services industry, offering established brick-and-mortar service for those who prefer face-to-face interactions. It boasts a wide range of loan options and a strong track record for customer service.
Standout benefits:
- Nationally recognized brand: Known for its reliability and financial stability.
- Dozens of retail locations: Provides in-person service for ease of accessibility.
- No service fees for HECM options: This can save money on upfront costs.
- Online application and 24/7 customer service: Offers both digital and traditional convenience.
Who’s This For?: If you prefer a well-established institution with physical presence and a variety of services, Mutual of Omaha is worth considering.
Pros:
- Available in all states except New York and West Virginia
- High customer satisfaction ratings
- Provides an assortment of tools on its website
Cons:
- Not transparent about rates and fees
Best Streamlined Experience
Guild Mortgage Reverse Mortgage
Guild Mortgage prioritizes a user-friendly experience, providing a comprehensive website packed with information about reverse mortgages and an interactive guide for applicants. It simplifies the learning process and makes understanding the process accessible.
Standout benefits:
- Easy-to-use and informative website: Provides a comprehensive resource hub for understanding the reverse mortgage process.
- Interactive step-by-step guide: Guides borrowers through the application process.
- Range of options: Guild offers various types of reverse mortgages, including HECM for Purchase, which allows borrowers to purchase a home in retirement without recurring monthly payments, and reverse refinance options.
Who’s This For?: If you value a clear and concise approach to learning and applying for a reverse mortgage, Guild Mortgage is a good option.
Pros:
- Available in 49 states
- Provides detailed explanation of loan options on website
Cons:
- Doesn’t outline fees and rates on website
- There is no online application option
Best for Those Under Age 62
Longbridge Financial Reverse Mortgage
Longbridge is unique for its ability to accommodate borrowers under the typical 62-year age requirement for HECM loans. Its Platinum Mortgage program can provide access to reverse mortgage funds for those as young as 55.
Standout benefits:
- Proprietary loan program: Allows those aged 55 and above to access reverse mortgages, offering flexibility to those retiring earlier than average.
- Larger loan limits: The Platinum Mortgage program can provide up to $4 million, addressing a broader range of needs.
- Guaranteed never owing more than home’s worth: Offers peace of mind, ensuring equity protection.
Who’s This For?: If you are planning an early retirement and need access to your home equity earlier than the typical age requirements, Longbridge Financial is a strong consideration.
Pros:
- Proprietary loan allows those as young as 55 to access a reverse mortgage, lower than the 62 that HECM reverse mortgages require.
- Accredited by the BBB with an A+ rating
- Available in all 50 states
- Provides a "scenario calculator," on its website that can help estimate the cost of a reverse mortgage
Cons:
- Can’t complete full application online
Best for Speedy Closing
Fairway Independent Mortgage Corporation
If you require funding quickly, Fairway Reverse Mortgage excels in processing speed. On some loans, Fairway boasts closings as fast as 17 days, a considerable improvement over the customary one to two-month timeframe.
Standout benefits:
- Efficient closing times: Delivers funds in a shorter timeframe compared to standard processing durations.
- User-friendly website: Provides tools and educational resources for borrowers.
- Connects with reverse mortgage planners: Offers access to experts for guidance and advice.
Who’s This For: For retirees seeking swift access to funds and appreciate a resource-rich online platform, Fairway Reverse Mortgage is an attractive option.
Pros:
- Available in every state except New York
- Closes on some loans in as little as 17 days
- Will connect you with a reverse mortgage planner
- Website is easy to use, interactive and filled with tools and educational resources about the reverse mortgage process
- Partners with financial advisors and real estate professionals
Cons:
- Information on rates and costs not transparent online
Best for Customer Satisfaction
American Advisors Group Reverse Mortgage
American Advisors Group (AAG) prioritizes customer satisfaction, earning praise from borrowers and a stellar reputation in the industry. Its commitment to customer-centric service shines through in its consistently positive customer ratings.
Standout benefits:
- Exceptional reputation: Demonstrates a strong commitment to delivering positive customer experiences.
- A+ rating from the BBB: Highly regarded for its ethical practices and customer care.
- Focus on senior-focused resources: Offers helpful tools, articles, and a magazine called Seniority, which provides retirement and financial planning information.
Who’s This For: If you place a high value on customer service and seek additional resources and guidance beyond the lending process, American Advisors Group is worth considering.
Pros:
- Excellent reputation
- Multiple mortgage loan options geared toward seniors
- Useful online resources, including a loan calculator and articles with retirement tips
Cons:
- Jumbo reverse mortgages are not available in every state
Understanding Different Types of Reverse Mortgages
The most prevalent type of reverse mortgage is the Home Equity Conversion Mortgage (HECM). This FHA-insured loan is exclusively for homeowners aged 62 or older. While most providers offer HECMs, they often offer variations beyond the standard HECM, such as jumbo reverse mortgages and those for individuals younger than 62.
Reverse Mortgage Frequently Asked Questions (FAQs)
Who is the largest reverse mortgage lender?
Finance of America Reverse (FAR) is currently the biggest provider of reverse mortgages in the U.S.
How do I select a reverse mortgage lender?
When choosing a reverse mortgage lender, it is essential to assess their customer satisfaction record and confirm they are FHA-approved. Additionally, consider their requirements regarding maximum home value, minimum age, and loan types they offer. Select a provider that caters to your specific needs, ensuring they offer appropriate loan types and limits that meet your unique situation.
What are the drawbacks of a reverse mortgage?
Reverse mortgages often carry higher fees than traditional mortgages. They may also pose greater risk than conventional loans, increasing the possibility of foreclosure in some scenarios. Thoroughly evaluate your financial situation and choose a reputable lender before proceeding with a reverse mortgage.
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Visit our methodology page to explore our process for selecting the best reverse mortgage lenders.
Please note: The rates and fee structures may vary based on market fluctuations. Once you accept your mortgage agreement, your fixed-rate APR ensures consistent interest rates and monthly payments throughout the loan term unless you refinance at a later date. Your APR, loan amount, and monthly payment are influenced by your credit history, creditworthiness, debt-to-income ratio, and chosen loan term. Lenders will perform a hard credit inquiry and require a complete application process, including proof of income, identity verification, and proof of address.
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Editorial Note: The opinions, analyses, reviews, and recommendations in this article are solely from the Select editorial staff and haven’t been reviewed, approved, or endorsed by any third party.
