Below are some questions to ask prospective reverse mortgage lenders. You should talk to at least three lenders before making any move.
What type of loan do you offer? (HECM, proprietary, single-purpose?)
What type of interest rate do you charge? (fixed or variable rate?)
What's the current rate?
If it's variable, on what index is the rate based?
If it's variable, what is the margin?
If it's variable, is there a cap on the rate?
If so, what is the cap?
How much will insurance premiums cost?
How much is the origination fee, if applicable?
What is the total estimate of my closing costs?
Please provide a breakdown of your fees:
What is the appraisal fee?
How much is the credit report?
How much is title insurance?
How much are legal fees and recording fees?
What other fees apply?
Do you charge a service fee set-aside, or SFSA?
If so, how much is the SFSA?
What's the maximum amount of money I can get in the form of a lump sum?
What's the maximum amount of money I can get in the form of a line of credit?
What's the maximum amount of money I can get in the form of a monthly payment for life?
What's the maximum amount of money I can get in the form of a monthly payment for a specific term of 10 years?
What's the maximum amount of money I can get in the form of a monthly payment for a specific term of 20 years?
Under what conditions would you close out my loan and force a sale on my home?
Important: A good lender should provide detailed information about the costs of reverse mortgages. If you are undecided about whether to get a proprietary loan or an HECM loan, ask for a detailed itemization of costs and benefits for both types of loans. According to the FTC, an HECM counselor or lender should be able to provide this information. Also ask to see the "total annual loan cost rates," which should give you an idea of the average annual cost in an itemized format.