In A Hurry? The Test Winner After 32 Hours Of Research
Strong Customer Service Reviews (4.9 out of 5)
Research Method to Review the Best Reverse Mortgage Companies
We engaged with each mortgage company, interacted directly with the loan officers and requested supporting documentation.
This secret shopping went up to the signing of the loan documents and then we revealed our purpose.
We also went through 5,420 consumer reviews to validate the accuracy of our assessment.
We wanted to make sure our experience was common.
Each company reviewed was given the same range of loan applicants, and we stored the fees, interest rates, and range of offered products in our database.
Whenever possible we attempted to remove subjectivity from this analysis.
The large scoring events were the education material provided, competitiveness of interest rates, sales approach, customer reviews and breadth of programs offered.
Specific to customer reviews we were very sensitive (and would double weight the negative scoring) if a customer complained about being surprised at time of the closing of the loan application process.
It is incredibly important to us that companies disclose full details of the loan package offering, and do so in a careful, transparent, and simple way.
The other rating criterion that deserves further clarification is sales approach. We expect loan officers to go at the pace of the applicant.
If we ever felt that the servicer was trying to introduce a program that benefited them and not us that would be a negative marking.
Also if the loan officer expressed frustration or dissatisfaction about the level of detail that we were trying to explore, we would also mark that as a negative event.
We were looking for an experience without time pressure and where we felt comfortable asking any questions.
The latter two categories may seem subjective, but after spending enough time in customer reviews I feel our assessments were accurate.
BEST REVERSE MORTGAGE COMPANIES
After our evaluation, we selected the top 5 companies based on our scoring.
Each of the five below are best in breed in terms of originating Reverse mortgages.
I was very impressed with the care and level of customer service these companies provide.
The reviews below will help you decide which company offers the specific services that are important to you.
Finance of America Reverse (FAR) Review
Top Product Offering
This lender is licensed in all 50 states and Puerto Rico.
Finance of America Reverse (FAR) is armed with a team of reverse mortgage specialists who provide its customers with attentive support.
For anyone who’s looking for a reverse mortgage and is unfamiliar with the process, Finance of America Reverse is a good place to start.
Customer reviews show the company’s agents to be not only knowledgeable but courteous and readily available.
Although the company’s site lacks a quote calculator, the “Contact” page collects key contact information and includes a drop-down menu so you can specify exactly what service you need whether you’re interested in a reverse mortgage for yourself, looking into one for a loved one, etc.
Numerous customer reviews were particularly positive about FAR’s customer service, whether it was walking people through the process step-by-step, how the money they could access helped them afford home repairs, competitive pricing or just how easy the process was overall.
Longbridge Financial, LLC Review
Top Customer Service
This company is very careful to not make a loan recommendation until they get to know the applicant.
In four of our test applications we tried to hurry the process along by selecting a specific program, and in each case the loan officer insisted we complete our profile before talking programs.
That is clearly a core company tenant, and one we appreciated and took note of.
Loanbridge Financial also takes customer service very seriously.
Each interaction that we had with a loan officer was followed by a TrustScore survey.
This is an instant feedback mechanism and attempts to measure the completeness and authenticity of the recent interaction.
The customer service agent and loan officer will receive the feedback immediately and take their scores very seriously.
As we went through this process it is clear that this instant feedback mechanism has had a significant impact on how this company treats its potential and existing clients.
Currently Loanbridge Financial has a 9.4 out of 10 score on the TrustScore scale.
We were very impressed with the knowledge of the loan officers we met. The information packets were up to date and clear, very engaging.
The product was good for the scenarios we presented, and the interest rates and origination fees were competitive.
AMERICAN ADVISORS GROUP (AAG)
Best Product Information
This company has both the marketing and operational components figured out.
I could not have been more impressed with the educational booklets and videos.
The AAG website is best in class, and their calculators let us model several scenarios.
The feedback we got most consistently from their customers is that their loans close fast.
You can tell that the AAG organization is well engineered, and that the paperwork moves fast.
It was not uncommon to hear or read comments about the loans closing well inside 30 days.
Based on the data provided by HUD (Dept of Housing and Urban Development) American Advisors Group is consistently the top rated servicer.
This mostly stems from AAG’s single focus is put on their reverse mortgage products. The do not dabble in HELOCs or forward loans rather they maintain a laser focus on this core product.
One Reverse Mortgage Review
One Reverse Mortgage was founded in 2001 and is a division of parent company Quicken Loans.
This company has a broad range of loans in the reverse space and has very competitive interest rates.
There is strict discipline in the application process.
For a company that is “Engineered to Amaze” the focus on the reverse side is to first meet with a loan counselor.
The highest volume product that One Reverse delivers is the HECM fixed rate loan that will generate a lump sum payment at closing.
Given the advanced technology that this company employees many applicants choose to defer the lump sum and instead will set a “Line of Credit” loan and retain some flexibility in how distributions are taken.
One Reverse Mortgage is licensed in all 50 states and is a HUD approved lender. They have also maintained an A+ rating in the Better Business Bureau.
In going through the process with both our counselor and the assigned loan officer, I was generally impressed with the knowledge base and pace.
They currently have over 100 trained specialists to shepherd retirees through the available loan options.
One Reverse does a good job of pushing the orientation and education material onto their online portals, and does a good job of not just depending on written pamphlets.
The Quicken culture is alive in well in this division.
Quick preaches the virtues of “Do the Right Thing” and “Every Client. Every Time. No Exceptions. No Excuses.”
This philosophy has driven a client centric climate, and we truly felt this as we went through the application process.
Tips To Get the Best Reverse Mortgage
All of the companies that I listed above can do a fine job shepherding you through the reverse mortgage experience.
This industry is heavily regulated so each step of this process comes with clear disclosures.
The trick (or advantage) is to be fully informed on the details that matter the most and where the risk lies.
This quick overview will get you oriented, and will give you the confidence needed to get the right loan for your situation.
First, what is a Reverse mortgage?
This instrument has it origins back in 1984 when President Regan signed this instrument into law.
The intent behind this loan was to give retirees on a fixed income the ability to tap into the equity in their home and generate either a lump sum or steady cash flow.
There are qualification requirements that I will cover in the FAQ’s at the bottom of this article that will provide specifics.
The Reverse mortgage has an inconsistent reputation, here is a link to a nice overview types of scams so you have awareness.
There have been instances where retirees have been misled.
Examples include contractors pushing this product on couples looking to get home repairs, loan officers attempting to maximize their commissions making recommendations inconsistent with the best interest of the homeowner.
With this being said, the Reverse mortgage can be a very useful, and tax efficient way, to improve the quality of life in retirement years.
The below are the key items to keep in mind as you consider this decision, and later as you navigate the application process.
Start with the Costs and Fees of the Loan (All of Them)
The terminology in the lending industry around mortgages is “forward” and “reverse.” A forward loan is your standard home loan with the structure you know.
We pay a monthly loan payment and some of the funds pay interest and the rest pays down the principal balance on the loan.
The reverse mortgage has most of the same terms but works the opposite. You will receive either a lump sum payment (back to you) or a series of monthly payments over the course of the loan.
Given the structure of both loans, they both have closing costs associated with them. You will have both origination fees (money you are paying the lending institution) and mortgage insurance premiums (PMI).
This is the fee that HUD charges to insure the HECM loans.
The difference with the reverse mortgage is that these fees will be added onto your loan balance over time, not paid at the time of closing, and this balance will continue to grow based on the agreed upon interest rate of the loan.
In short, instead of the loan balancing dropping over time, it will grow, and the exposed balance will be assessed interest.
Read the Fine Print
For interest rates, the loan can be structured to either have a fixed interest rate or a variable rate.
In order to get a fixed rate you will have to take a lump sum (called a “closed end” loan); otherwise, the loan will be structured with a variable rate that will reset monthly or quarterly.
The closed end/fix rate loans make up a fairly small portion of originated reverse mortgages.
Most of the time the borrower will set the variable monthly payment, or establish a “line of credit” and take the money out as needed.
Both of these two latter terms will have interest rate risk.
To be clear, that can work either to our benefit or detriment.
If rates drop, we win, if they rise so will the mortgage balance.
One of the largest default risks in these loans is the inability to pay property taxes and insurance.
Please ensure these future cost obligations are accounted for.
This risk can be addressed by setting aside the funds at the time of loan closing to ensure the money is available to make these payments.
Don’t leave the conversation with your loan officer without being comfortable that there will be no risk in making these payments. This is the easiest way to lose your house.
If Married, Put Both Spouses Name on Title
In 2014, HUD made adjustments to their rules that allows for the assumption of the mortgage, even if the surviving spouse is less than 62 years old.
Previously, given the strict age requirements, the surviving spouse would have to scramble to get financing in place to retain the house.
Having both parties on the title, and maybe the loan (if they qualify), will help avoid any delays or questions after the passing of a spouse.
Know the Available Terms of Loans
As discussed briefly above, a reverse mortgage can be packaged as a lump sum payment, a “Line of Credit”, or a series of payments over time (Tenured payments).
What is most common today, and the one that I often recommend, is the “Line of Credit” structure.
This allows you to be able to tap into your home equity at any time, but you are NOT being charged an interest fee on the available funds not withdrawn.
This gives you the flexibility without the cost.
Your Loan Officer Has to be a Good Fit
I will recommend the companies that have the best reputation and the best programs, but you still have to make sure the loan officer that you are working with meets your personal preferences.
You must trust that this person has your best interests in mind and is acting as your fiduciary.
Ensure you Keep your Beneficiaries Informed
To be clear you are not asking for everyone’s permissions but it is best to keep loved ones informed.
Once you put this structure in place, you will be setting the terms for how your home will be dealt with after your death.
In some cases and depending on timing, the balance of the mortgage could be more than the house is worth.
Talking with children and loved ones ahead of time, there may be other options today that are superior to a reverse mortgage.
I’ve seen family members assume payments of the monthly mortgage or insurance/taxes, and that relief was all was needed to keep the parent financially comfortable and stay in their house.
Common Asked Questions on Reverse Mortgages
Some of the most commonly asked questions:
Can I move if I have a reverse mortgage?
Yes, if you are over 62 or have a spouse that is over 62 and is on title of the mortgage. You also need to live in the house as your primary residence, the house needs to meet FHA underwriting standards (Single Family House, Multi-unit < 4 units, Manufactured home built after 1976).
You will also need to have enough equity in your home for the loan to make sense.
Normally, I like to see a home value twice the current mortgage (50% loan to home value ratio).
We have a more detailed article on reverse mortgage requirements here.
Can you get a reverse mortgage if you owe money on your home?
Yes, you can have a mortgage on your home at the time of the application but the proceeds from the reverse mortgage will be used to pay this loan off.
You will need to have enough equity in the home for this loan to make sense, see previous answer.
Can you get a reverse mortgage on multiple homes?
No, probably not.
A reverse mortgage can only be taken out on your primary residence.
However, if you have a spouse over 62 and the property is deeded in her name, she could independently qualify for a second loan.
How much money can you expect from a reverse mortgage?
This will depend on your current equity position in your house.
It will also depend on your current age and property type.
There are several calculators available online but the best that I found is Lendingtree’s calculator.
Below is a screen shot so that you can see the required elements.
In general, the lower the existing mortgage on your house and the older you are (or the youngest borrower), the higher the loan potential.
Do you have to pay property taxes on a reverse mortgage?
You will have to continue to make property tax and insurance payments.
Missing these recurrent payments is the number one reason for default on reverse mortgages.
At the time of loan origination, you can arrange for a portion of the loan payment to be set aside for these future obligations.
This may be a good option for those that lose track of these payments.
How long do reverse mortgages last?
Reverse mortgages are set to expire at time of death or when the borrower moves out of the primary residence.
There are assumption provisions for surviving spouses (even if younger than 62) to reduce hardship.
What happens when you sell a house with a reverse mortgage?
The reverse mortgage will come immediately due when you sell you home. This is just like a traditional mortgage.
You will have to pay the full balance of the loan with the proceeds from the sale.
The seller will keep any equity above the loan payoff.
So, again, very similar to have a traditional forward mortgage.
What is the down side of a reverse mortgage?
Reverse mortgages have origination fees (up to 2% of loan value).
The loan balance will grow over time (versus a traditional loan that decreases).
Beneficiaries or heirs will sometimes be confused or feel the family home should be transitioned unencumbered.
There is an obligation to remain in the home as your primary residence to keep the reverse mortgage.
Some will feel this restricts their flexibility.
You must stay current on your Property Taxes and Insurance payments or your risk default.
This is the same as a forward mortgage or a home without a mortgage but an obligation nonetheless.
Is There a Maximum Age to Qualify for a Reverse Mortgage?
You have to be at least 62 to qualify for the loan, but there is NO upper limit on age.
The oldest recorded loan applicant is 101 at the time of this writing.
I’m sure with life extension, life expectancy this will continue to be challenged.