With the HECM reverse mortgage product there isn’t a whole lot of difference between lenders and banks etc, it is the same FHA insured product. The difference is in the fees and more people than you’d think don’t pay enough attention to them. The Home Equity Conversion Mortgage (or HECM) is what most borrowers tend to think of when they think about a reverse mortgage. (One reason can be attributed to the fact that the HECM Reverse Mortgage is the reverse product that all of those pitchmen including ex-congressmen and television stars are selling on TV infomercials.) The HECM is the product offered by FHA/HUD that is government insured etc. With this product, there are fees that can be lowered and even waived and borrowers need to pay more attention to them!
The biggest fee to keep an eye on is the origination fee which, depending on the value of your home, can be as high as $6000. The origination fee can be lowered or waived depending on the lender or broker you are dealing with. How the industry works is that most loan officers get paid based on the initial loan amount; which means the amount immediately borrowed to pay off an existing mortgage or initial cash out. So for example, if you were to take out $100,000, the loan officer would be paid on the $100,000. The money left in a credit line or taken as monthly payments does not count towards a typical loan officer’s commission. If a borrower is taking out very little money up front then the loan officer is making very little and will opt to charge more in origination. If a borrower decides he or she wants to pay off a decent size mortgage or take a healthy lump sum, then there is no reason the loan officer should not waive the origination or at least lower it substantially.
We (USA Reverse Mortgages by iReverse Home Loans) are able to beat any price on the street because we have even more latitude than other lenders or brokers. If we offer pricing and someone else says something lower we guarantee to beat the pricing. We would ask for something in writing from the other lender or broker to illustrate this. The other fees involved with the reverse other than the origination are the mortgage insurance premium and the regular closing costs (title, escrow, notary, appraisal etc). Depending on how much you’d like to borrow, we may be able to give credits for these additional fees as well.