Bankrate: Top Questions All Reverse Mortgage Borrowers Should Ask

Education is vital when it comes to understanding reverse mortgages and to become educated, potential borrowers must ask the right questions. While there are certain parts of the loan process that are self-explanatory, others are more complex and require prospective borrowers to ask certain key questions before moving forward with a reverse mortgage, according to a recent Bankrate article.

Bankrate suggests potential borrowers should ask six questions, which address much of the misinformation about the reverse mortgage product. Arguably the most important question a borrower should ask him or herself before starting the process is “Who am I working with?” the article says.

Borrowers should be shopping around for a company that fits best with their needs. An important designation to look for is if a lender is a member of the National reverse Mortgage Lenders Association (NRMLA), the article points out. Another tip is to check out the lender’s rating with the Better Business Bureau.

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Another important question that many people are misinformed about is if they will still own their home if they take out a reverse mortgage.

“Borrowers still have this perception that if you get a reverse mortgage loan the bank is going to own your home,” Paul Fiore, executive vice president of sales for American Advisors Group, said in the article. “And that’s absolutely not true. It’s no different than a traditional mortgage.”

Lenders should explain to borrowers how a reverse mortgage will affect their heirs.

“It’s a complex issue that is affected by whether you have a co-borrower, whether you are married to someone who is not a co-borrower, and whether the last borrower dies while living in the home or moves out permanently before then,” the article states.

Another important point that should be discussed from the beginning with potential borrowers is that a reverse mortgage will not solve all of their issues. Yes, a good loan officer will want to help you solve all of your issues with the loan proceeds, but nothing is guaranteed.

“With these questions, the loan officer and the borrower can discuss whether it’s a good idea to get a reverse mortgage loan, and if so, if now is the time or if it would be better to wait,” the article states. “They can discuss whether to get a fixed-rate or variable-rate loan, and which type of payout would be best: a lump sum, a line of credit, monthly payments or a hybrid of a line of credit and monthly payments.”

Borrowers as well as good lenders should be on the same page when it comes to education about the reverse mortgage product. In the end, as a loan officer, withholding vital information or not answering questions in full can be detrimental to the borrowers experience and future opinion of the product.

View Bankrate’s top questions that consumers should ask when considering a reverse mortgage.

Written by Alana Stramowski

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  • Let us call the Bankrate so called article by its rightful name. It is an advertorial written and paid for by AAG. There is nothing wrong with advertorials when they are properly identified as such.

  • While some seniors may feel comfortable with discussing their financial plans with a reverse mortgage originator, qualified mortgage originators are not trained financial planners unless they have separate training in that field. For financial planning, seek a competent CFP or CPA.

  • No doubt that education is vitally important for the borrower to have but it is more important for the loan officer to have the extensive knowledge about their product so they can educate the borrower.

    Yes, our senior borrowers have to make sure the people they are dealing with are reputable and knowledgeable.

    Being a member of NRMLA is very good and please do not misunderstand what I am about to say! Just because you are a member of NRMLA does not mean the company or loan officer is the best in their field!

    A borrower must have their full faith and trust in the loan officer and company when entering into their reverse mortgage transaction with those that they choose. Seniors are smart and they have a good inner sense. The loan officer represents the company and he or she is the one that will either instill the trust needed or not!

    A loan officer that can answer questions without hesitation, recognize the needs of the senior client and one that will show the patience with the borrower, will most likely be the one that will take the loan application!

    John A. Smaldone
    http://www.hanover-finacial.com

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