Best Reverse Mortgage Options
1) What is the best reverse mortgage?
I can help answer that question by adding “what is the best reverse mortgage for you?” In this article I will go over the standard reverse mortgage rates, fees and programs. I will discuss what is a good way to go about finding the best reverse mortgage. I will also ask some questions that everyone reading this article should answer. These questions will help you focus in on the best reverse mortgage for you. Each reverse mortgage program and rate comes with its own set of benefits and advantages. The goal is to find out what your objective is with a reverse mortgage and pick the program and rate that offers you the most benefits and advantages.
2) Does your best reverse mortgage eliminate you having to pay the monthly mortgage payment out-of-pocket?
If this is your main goal then the good news is that any of the reverse mortgage programs will achieve this. However, there are some programs that might be better when trying to achieve the best reverse mortgage for you. The fixed rate reverse mortgage programs require you take all available money as a lump sum and the adjustable rate programs offer a line of credit feature, so you do not have to take any money until you need or want too. Please keep in mind that you will still be responsible to pay for your property taxes, homeowners insurance and any HOA/PUD fees.
3) Does your best reverse mortgage allow you access to the most money?
OK, so your main goal is to access the most money from the equity of your property. This is a common benefit that homeowners make a high priority. There are a couple different aspects to think about when planning to achieve your best reverse mortgage that offers you the most money.
Your current loan balance that will need to be paid can have more implications on what you qualify to receive other than just the payoff amount. With a reverse mortgage there is an initial disbursement limit set, so that you can receive “x” amount of dollars the first year with the remaining amount being released after 12 months. The initial split is 60% of your starting approved loan balance with the reverse mortgage. The remaining 40% will be released after the first 12 months. However, the fixed rate reverse mortgage program might not offer the most money in these situations. If a homeowner finds themselves under the 60% initial split then the fixed rate will only allow them to access a max of 70% of what they could have available to them. The adjustable rate programs can allow a homeowner to access the first 60% and then the remaining 40%. Depending on your loan balance the fixed rate reverse mortgage, or adjustable rate reverse mortgage program may have a lot to do with getting the most money.
The timeframe that you need the money can also play a factor. While the fixed rate or adjustable rate program may offer the most immediate money the adjustable rate program might be better than the fixed rate as a long term goal. The adjustable rate programs offer a credit line growth rate, which allows for more and more available money in the line of credit every month. This growth rate is not interest being earned, but it is more available money you can access from the equity in your property. The growth rate is tied to the interest rate selected on the adjustable rate program. Some homeowners have requested they receive a higher rate, because it will allow their line of credit to grow at a faster rate. The purpose behind this idea is that they will have more available money to them in the line of credit for retirement.
Discounts can also help every homeowner get more money from their reverse mortgage whether it is needed immediately, or it is part of a long-term goal. Good Day Reverse offers origination fee discounts on all of our programs, so that you get the most out of your home equity. We also offer all of the reverse mortgage programs spoken about above to help you find the best reverse mortgage!
4) Or is your best reverse mortgage a combo of both?
So your best reverse mortgage is somewhere in the middle? Maybe you would like the adjustable rate reverse mortgage, because in your scenario you can receive the most money and you prefer a lower rate with some discounts. Or, maybe you would like the fixed rate reverse mortgage, because in your scenario you can receive the most money and you prefer a fixed rate with some discounts. Good Day Reverse can accomplish this for you.
5) How to Shop for the Best Reverse Mortgage Programs and Rates?
There are currently four different reverse mortgage programs that a homeowner can inquire about at this time. The first three programs are called a HECM, or Home Equity Conversion Mortgage. The programs you can select from are the annual adjustable program, the monthly adjustable program and the fixed rate program. All (3) are government insured and have a current lending limit of $679,650. The fourth program is a proprietary reverse mortgage that is sometimes referred to as the “jumbo.” This program is a fixed rate program that is not government insured and it allows borrowers to go above the $679,650 lending limit. Typically the jumbo reverse mortgage is most beneficial to homeowners with values of $1,500,000+.
Annual Adjustable Program-
This program is based on the 1-year LIBOR index rate. Since this is an annual program your rate will adjust with the reverse mortgage every year based on the current value of the 1-year LIBOR rate. The annual reverse mortgage program has a lifetime interest rate cap of 5% over the starting rate. If your starting interest rate was 3.50% then the interest rate can never go higher than 8.50% for the life of the loan. The annual reverse mortgage program does have an annual cap of 2% over the current interest rate. If your current interest rate was 3.50% then your rate could never jump higher than 5.50% for the following year. Does this sound like your best reverse mortgage?
Monthly Adjustable Program-
This program is based on the 1-month LIBOR index rate. Since this is a monthly program your rate will adjust with the reverse mortgage every month based on the current value of the 1-month LIBOR rate. The monthly reverse mortgage program has a lifetime interest rate cap of 10% over the starting rate. If your starting interest rate was 3.50% then the interest rate can never go higher than 13.50% for the life of the loan. There is no annual interest rate cap, so the rate can readjust to whatever the current 1-month LIBOR is at the time of adjustment. Does this sound like your best reverse mortgage?
Fixed Rate Program-
The fixed rate reverse mortgage program might feel very familiar for many of homeowners who have a mortgage they are making monthly payments too. The rate is fixed and remains fixed for the life of the reverse mortgage. If you were to review a reverse mortgage amortization schedule you could see exactly what your loan balance would be in 15 years. In this sense the fixed rate reverse mortgage is a very steady program that can offer many advantages for homeowners. Does this sound like your best reverse mortgage?
Jumbo Reverse Mortgage-
The jumbo reverse mortgage program may fit a particular need for homeowners with home values of $1,500,000+. It allows the homeowner to supersede the government lending limit of $679,650 to reach the full appraised value of the property. The jumbo reverse mortgage is only available in fixed rate where all the available funds will be disbursed to the homeowner in a lump sum. This is a proprietary reverse mortgage program that is not insured by the government. Does this sound like your best reverse mortgage?
6) How to Shop for the Best Reverse Mortgage Costs and Fees?
To find the best reverse mortgage fees and costs you need to first understand what these fees are and how they can be discounted.
Find the Best Reverse Mortgage Origination Fees
An origination fee is allowed by HUD to be charged by the lender or broker as part of the reverse mortgage fees. This fee is usually charged by the company to pay for the origination and processing of the reverse mortgage. This reverse mortgage fee is a payment that goes directly to the company originating a reverse mortgage and is paid through the loan at closing. Although the borrower does not pay the origination fee out of pocket, it does decrease the net amount of money that a borrower can receive with the reverse mortgage. When qualifying for a reverse mortgage every reverse mortgage fee that is applied to the loan is less money the borrower can receive as a lump sum, in a line of credit or as a monthly disbursement.
This is why Good Day Reverse discounting the origination fee can be so important. It not only lowers the initial loan balance, but also offers our borrowers more money.
Find the Best Reverse Mortgage Servicing Fees
A servicing fee can be implemented by a lender to pay for the ongoing servicing, or upkeep, of your reverse mortgage. The servicing company of the reverse mortgage is responsible for managing a borrowers available line of credit and issuing monthly disbursement payments if that is the program you choose. If there is a life expectancy set-aside the servicing company will be responsible for making the homeowners insurance, property tax and any HOA payments on time. In addition, the servicing company will send monthly statements showing the current details and status of the borrowers reverse mortgage. This servicing fee can range from $25-$35 a month. Since this is a fee to be paid for the life of the loan the lender is required to create a “set-aside” at the beginning of the loan. This set-aside can be $3,000+ and will be subtracted from your available money with the reverse mortgage.
Good Day Reverse waives servicing fees on all programs so that you pay $0 for the life of the loan.
Find the Best Reverse Mortgage Finance Costs
The reverse mortgage process requires that certain items be ordered to complete the loan. These items do incur a cost that is financed to be paid through the loan at the closing. Here are some examples of these costs: Appraisal, title, escrow, credit report, recording fees and all other costs associated with the closing. A borrower can typically see a total cost of $1,500-$3,000 that will be paid through the loan.
7) Finding Your Best Reverse Mortgage is Possible
You now know a few of the important questions to consider when trying to find the best reverse mortgage. At the end of the day it always helps to speak with a couple different reverse mortgage companies to see the different programs, rates and fees they offer. Then you can start to compare and contrast these differences and find which of the reverse mortgage companies offer you the best reverse mortgage.
8) Our Good Day Reverse Advantage
Good Day Reverse is your discount reverse mortgage company. With our innovative approach you are able to choose the reverse mortgage program that works best for you all for a discounted cost. The results are better loans, lower fees and more money in your pocket. Why get less, when you can get more! Good Day Reverse was created by reverse mortgage industry professionals to build a better way of doing reverse mortgage loans. We have a deep knowledge of reverse mortgage loans and know what it takes to create a fast and pleasurable experience. We are here to help and not sell or pressure. Whether you are looking for a reverse mortgage now, or just looking for more information, we are the right company to come too. We disclose multiple programs and options on every quote, so that each homeowner can view their wide range of options. In addition, we love to answer any questions.
If you have questions at anytime while reading this article, or need more information please do not hesitate to contact us at toll-free 877-676-6542, or by requesting a reverse mortgage special offer quote.
Good Day Reverse, Inc is licensed or registered to engage in reverse mortgage loan origination activities in the state of California
November 13, 2018
October 27, 2018