How to Negotiate Reverse Mortgages
A reverse mortgage application is subject to fees including insurance requirements, legal services and loan administration costs that cannot be eliminated. Other costs include FHA charges for administrative services which are required of anyone going through the application process for home equity conversion mortgage or for an FHA insured reverse mortgage loan. These costs are typically rolled into the monthly payments, increasing your payments. Reverse mortgage negotiation comes into play with the broker and loan officer.
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Instructions
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Hire a mortgage broker to assist you with the reverse mortgage application process. Verify the broker's experience in closing reverse mortgages. A broker is accustomed to researching loan options and finding favorable terms for borrowers. He may be able to help you save more in loan processing fees and loan terms than what you pay for his services.
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Make a reverse mortgage loan inquiry with several different lenders or ask your broker to check the lender market on your behalf. Make it known to the lenders that you are comparison shopping for best rates. Ask the lenders to show the reverse mortgage interest rate, monthly service costs, origination fees and cost for services from third party agents at the closing. Do not accept answers in verbal terms. Get rate and contract details in writing.
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Meet with the lenders or ask your broker to contact lenders to negotiate those costs that can be reduced. Ask each lender to cut the costs of origination, closing and monthly service fees for the loan. Find out if the interest rate can be reduced; for example, there could be a mistake with your credit score, adversely affecting your loan terms.
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Request specific reductions in loan costs. Ask for a fee reduction for a specified dollar amount. Use your other loan offers as leverage; you loan officer may find a way to reduce closing costs if he believes you may use another lender. Fill out a reverse mortgage application with the lender who offers you the best loan terms and payment options.
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Tips & Warnings
Consult with an adviser who is familiar with reverse mortgages and other loan options for homeowners. HUD sends a councilor to those making a reverse mortgage application for one of their federally insured home equity conversion mortgage loans. Ask your councilor elect the best type of loan for your current need and future plans.
