Conducting a Reverse Mortgage Company and Broker Comparison
Doing a comparison between reverse mortgage companies and brokers is the most important task you can do. With all the hype surrounding reverse mortgage loans, you have to sift information and separate fact from myth.
If you are a senior citizen, you should do some comparison shopping to find a broker or a company that would give you the best deal in town. It all boils down to the “choice Good Deal Co and Better Deal Co.” (You will always want to choose the better company, if not the best of all companies.)
When you close a reverse mortgage deal, you will be entering into an agreement. This agreement will be different from the agreements of regular loans and mortgages. One comparison you can make is that you get to keep your house while the debt is piling up. Thankfully, the loan doesn’t get repaid until the house is resold, refinanced, you die or are permanently moving out of your home (whichever comes first).
Before any closings, you will want to shop around for the best reverse mortgage company or at least one of the better companies. You can have a broker do this for you. However, the good-old common sense will tell you that you also have to do your homework. Read up!
On the market today, you can actually find three types of reverse mortgage products. The most popular are the HECM loans. Most senior citizens only apply with HECM reverse mortgages and hire brokers to sign them up. HECMs are built to be less expensive (reverse mortgages are never cheap) than the other types of reverse mortgages. A comparison never fails to show this.
They are also popular because the federal government plays hard-to-get on them. Only senior citizens who are at least 62 years old are eligible for the loan. Before you can apply for an HECM reverse mortgage, you are required to undergo a credit counseling with a reverse mortgage counselor from counseling service accredited by the government.
The reverse mortgage counselor will actually do some hammering on you – about the pros and cons of reverse mortgages. He or she will also do some parenting, that is, find out if a reverse mortgage loan is really good for you. After the counseling session, you can begin to find a reverse mortgage company or companies that will let you apply for the loan. If you can’t find one on your own, hire one of them brokers.
Reverse mortgages are a great way to take out cash on your home’s equity. However, like any good thing, there are tradeoffs to this program. Your counselor should discuss this with, because your brokers won’t.
For one thing, reverse mortgages may affect your eligibility for types of loans. It can also affect the total value of the borrower’s estate. More importantly, beneficiaries of Medicaid and Supplementary Security Income (SSI) could stand to lose their benefits.
Most seniors do not know about this, but a loan advance is considered cash or income if the recipient keeps the money beyond the month they received it. Seniors might just find themselves ineligible for those State benefit programs if they are not careful.