3 Facts About Reverse Mortgages
What Everyone Needs To Know
This information pertains to the Home Equity Conversion Mortgage (HECM) which comprises the majority of reverse mortgages in the U.S.
Fact 1: All Lenders Must Follow The Same Guidelines
Whether it's Abide, those guys on TV, or the local bank - all lenders must follow the same strict underwriting and program guidelines established by the Department of Housing and Urban Development (HUD). This means all the rules pertaining to eligibility, qualifications, and loan approval are the same.
The reason for strict adherence across the board comes down to the insurability of the reverse mortgage. All lenders want to be certain the reverse mortgage they underwrite will be insured by The Federal Housing Administration (FHA). If guidelines are not followed, the lender risks the liability of an uninsurable loan, and no lender wants that.
Fact 2: No Matter Whom You Start With,You'll End Up At The Same Place
How do you know which company to go with? Do you go with the paid spokesman you see on TV? Do you go with a bank? Should you work with Abide?
Knowing the previous fact we mentioned above can help put your mind at ease that everyone has to play by the same rules. Another key point is no matter what company you start with, once your reverse mortgage closes it will ultimately end up in the very same place, The Government National Mortgage Association, also known as Ginnie Mae.
Ginnie Mae currently securitizes all HECM reverse mortgages in the U.S. In other words, the finish line for all reverse mortgages, regardless of which company you started with, is the same for everyone.
So, if everyone has to follow the same guidelines and your reverse mortgage will end up at the same place regardless of the lender you go with, does it matter which lender you choose?
If you don't care about the interest rate you are being charged, the amount of closing costs being added to the loan, or the experience and expertise of the company then it doesn't matter which lender you choose. However, the primary difference between reverse mortgage lenders comes down to the interest rates they offer, the closing costs they charge, and their expertise.
Even a slightly higher interest rate can translate into tens of thousands of dollars in additional interest charges over the life of the loan. The closing costs can also be thousands of dollars apart from lender to lender.
One phone call to the experts at Abide could mean the difference between saving thousands or being charged thousands more.