How to Choose a Reverse Mortgage Lender

Working with a reverse mortgage lender can provide you with a way to create a steady source of income for yourself during your retirement years. When going through this process, it is important that you choose the right lender for you. Here are the basics of how to choose a reverse mortgage lender.

Interest Rate

Because the homeowner does not make monthly payments with the reverse mortgage, many people do not think about how important the interest rate on the loan is. However, the money for the interest on a loan is going to come out of the equity of the property. Therefore, even if you are not paying for it in the form of monthly payments, you will be paying for it in the long run. By finding a loan with a lower interest rate, you will be able to borrow more money from the lender. This could come in the form of larger payments or the ability to receive payments for a longer period.

Closing Costs

When you are looking at different reverse mortgage lenders, you want to make sure that you take into consideration how much the closing costs will be. The closing costs on this type of loan can be significant depending on which lender you end up working with. The money for the closing costs will not have to come out of your own pocket. Instead, the lender will simply finance it into the value of the loan. This means that this is going to eat into your equity in combination with the interest on the loan. When you start working with a  reverse mortgage lender, the lender is required to give you a good-faith estimate of closing costs within three days. If you are working with multiple lenders at once, you will be able to easily compare all of the closing costs from each of the lenders. Look at the origination fee, points and any other closing costs that they are charging you.


When you are looking at a potential lender, you want to make sure that you ask about the servicing of the loan. Most lenders sell their loans to other organizations after they have originated them. This means that another company is potentially going to be servicing your loan. If you can find a lender that services their own loans, this could be to your advantage. This way, if you ever have a problem, you will know exactly whom to talk to.

Accessing the Money

You want to look at the options that you have when it comes to accessing your money. Some programs will allow you to receive regular monthly payments, while other programs will give you access to a line of credit. Some programs will also combine monthly payments with access to a line of credit for the equity in your home.