The latest in what has been a series of articles focused on various reverse mortgage topics over the last few weeks, the Huffington Post advises readers on how to select the Home Equity Conversion Mortgage (HECM) lender with the best deal, this time with the help of “The Mortgage Professor” Jack Guttentag.
The second installment of a two-part series on how seniors can navigate the reverse mortgage market, the article discusses the different price components of HECMs such as interest rate and origination fee, what prospective borrowers should know when it comes to competitive pricing on reverse mortgages.
“In many markets, including the market for standard home mortgages, the difference between the most competitive price and the ‘next-best’ price is modest, but in the HECM reverse mortgage market it can be huge,” writes Guttentag, adding that he has seen rate differences of over 1% and origination fee differences exceeding $14,000.
Among the reasons, he notes, is that “seniors tend to focus on the amounts they can draw rather than what it will cost, and lenders cater to that.”
The article also contrasts the reverse mortgage market from the traditional, forward market in the sense that there are few multi-lender shopping sites in the reverse space that allow prospective borrowers to compare prices between lenders.
“Lenders participating in such sites are prepared to price competitively,” Guttentag writes. “That has long been the case with standard mortgages, and it is true as well for reverse mortgages. The difference is that there are about 8 or 9 multi-lender sites covering standard mortgages, whereas at present there is only one that covers reverse mortgages: mine. At this writing, 9 lenders participate.”
Read the Huffington Post article.
Written by Jason Oliva