How to Choose A Reverse Mortgage Lender

Tip #1:  Work with a specialist.

There exist very few similarities between a conventional (forward) mortgage and a reverse mortgage.  Deciding if a reverse mortgage is right for you is an important decision demanding much research and professional counseling.  Your Reverse Mortgage Lender should be uniquely qualified and expert in the entire process from application to funding.

Inquire as to the percentage of their business is the reverse mortgage program.  Just because a Loan Officer can originate a HECM loan doesn’t necessarily indicate that they are uniquely qualified to do so.

Finally, if you feel pressured by the Loan Officer to make quick decisions, advise him or her that you would like to get a second opinion before committing to their services.  Involve a family member or friend in the decision and don’t hesitate to call another lender to ask their opinion.

Always work with a company that exclusively originates reverse mortgages.

New Mexico Reverse Mortgage is the best Reverse Mortgage lender in the State!  We exclusively originate reverse mortgages and stay on top of the ever-changing rules and regulations of this program.

Tip #2: Work with a lender that is committed to you and the industry.

Is your lender a member of the National Reverse Mortgage Lender’s Association (NRMLA)?

Use the search tool below to locate lenders in your state (specifically the state in which the property is located). All lenders are members of the National Reverse Mortgage Lenders Association, licensed to originate reverse mortgages in the states in which they are listed and have signed NRMLA’s Code of Conduct and Professional Responsibility.

NRMLA Members must adhere to a strict Code of Ethics & Professional Responsibility that requires the highest ethical treatment of reverse mortgage customers before, during, and after they receive their loans.  They have taken an oath to reverse mortgage borrowers and to represent the industry positively.  This Pledge makes 19 different promises to borrowers that will allow borrowers to have a safe and deliberate reverse mortgage experience. 

Tip #3: Find a Loan Officer that is willing to help and advise you (or your heirs) after the loan closes.

Your Loan Officer won’t have access to your new reverse mortgage account after the loan closes.  However, your “LO” should still be considered as an excellent reference for questions you or your estate may have later on.

Can you talk to your Loan Officer after the loan closes?

Often times, the LO is not allowed to speak to a senior after the loan closes.  Also if you work with one of the national telemarketing “call centers” to originate your reverse mortgage, you may find the turnover rate of their employees to be higher.

Tip #4:  Check personal references or testimonials.

The testimony of others who have been through the reverse mortgage process can be invaluable in making an informed decision.  What did others say about their experience?  Were they comfortable and confident with their lender throughout the process?  Who do they recommend as an ethical and competent reverse mortgage lender?  You can also check the Nationwide Mortgage Licensing System (or NMLS) by typing the company or loan officer’s name to find out if there are any Regulatory Actions that have been taken against them.  New Mexico Reverse Mortgage loan officers have passed National and State exams, maintain Continuing Education hours and have been processed through FBI Background checks.

What do past clients have to say?

A referral from a past client or business professional is also often the strongest testimonial.

Purchasing A Home with A Reverse Mortgage HECM for Purchase

Typically, retirees use HECM reverse mortgages to eliminate debt and generate additional income for home improvements or leisure ends.  But did you know that 26% of all homes sold in America are to people 55+ years old?

Many seniors choose to move into a different home as they age, whether to be closer to their families, experience new geographical areas, or for health reasons related to the climate of their current location. They may also desire to down-size (or perhaps more accurately “right-size”) to a home that is easier to maintain as their physical capacities decline. Regardless of the motivation, many seniors do choose to move in their retirement years.

The “HECM for Purchase” (aka: “Reverse for Purchase”) program is a unique way to finance the purchase a home.  It was designed by HUD in 2009 to allow seniors to purchase a new principal residence and obtain a reverse mortgage within a single transaction.   The HECM for Purchase was also designed to enable senior homeowners to relocate to other geographical areas in order to be closer to family members or “right-sizing” to homes that meet their physical needs (handrails, one level properties, ramps, wider doorways, etc.).  Regardless of your reasons for moving, you can use a Reverse Mortgage to assist.

Prior to 2009, HUD did not allow people to purchase homes with Reverse Mortgages.  Seniors were required to purchase the home on a conventional mortgage or paid cash and then had to apply at a later time for the Reverse Mortgage.  Consequently, they were subject to paying the closing costs on two separate loans.

Because the HECM for Purchase is still a relatively new way to finance, few home buyers and Realtors are familiar with the program.  In 2013, a national survey of 1,100 Realtors, only 12 Realtors (or 1.1%) knew details about the Reverse for Purchase financing option.  This undoubtedly is due to the fact that the program is relatively new; the first HECM for Purchase transaction only closed in June 2009.  Additionally, few companies specialize in the Reverse Mortgage program, and this is another reason that the HECM for Purchase continues to be unknown.

Of course, like all HECM programs, the HECM for Purchase option is reserved for those seniors 62 years and older.

Consider the following scenarios in which you plan to buy a home, have $150,000 in cash and your main objective is that you DO NOT want a house payment. (The numbers are only meant for general illustrative purposes; the older you are, the smaller the down payment required).

You have 3 choices:

1.     You buy a $150,000 home and pay cash for it.

2.     You buy a $150,000 home; put $70,000 down; finance the remaining $80,000 with a reverse mortgage. You still have $80,000 cash in your bank account as a nest egg for your future use.

3.     You buy a $300,000 home; put $140,000 down; finance the remaining $150,000 with a Reverse Mortgage and still have an extra $10,000 in your back pocket.

Buying a new home can be much more affordable if you allow yourself to explore these HECM purchase possibilities.  All three of the above options accomplish your primary goal of not having a monthly house payment!  The decision as to which of these three choices best suits your needs is entirely your decision, but now you know about a new source of purchase money financing that does not require monthly Principle and Interest payments; from that knowledge, you can now confidently consult with a HECM professional to go over the best options.

New Mexico Reverse Mortgage suggests that you and your Realtor meet with us prior to shopping for a home.  We’ll give specific numbers and other important details about the process, the policies and guidelines for a HECM for Purchase, and the nuances and specific process to purchase a house using a Reverse Mortgage that will benefit and educate both of you.