A reverse mortgage allows a homeowner to borrow money against the value they’ve accumulated in their home. Instead of making payments to a lender, the lender makes payments to the homeowner, based on a percentage of their home’s equity. Over time, this means that the homeowner’s debt increases as their equity decreases.

Reverse mortgages are meant to help people over 62 years old obtain income for their retirement, while still retaining the title to their home. If the names of both spouses are on the mortgage, the bank cannot sell the house until the surviving spouse passes away, or if any of the following situations occur: they become delinquent on property taxes or insurance, the home falls into disrepair, they move, or sell the home. In any of these scenarios, the loan automatically becomes due, but until then, repayment of the mortgage—either the principal or the interest—isn’t required until the borrower dies or the home is sold.  

The most important things to consider when choosing a lender for a reverse mortgage are the company’s reputation, the closing costs and associated fees, how the money is disbursed, and finally the lender’s customer support and reviews. Closing costs can vary greatly between lenders, so before agreeing to a loan, it’s important to evaluate whether the fees are reasonable or unnecessary. Another factor to watch out for are high interest rates, which can significantly lower the amount of your monthly payment.

Reverse mortgages have a complex reputation. There are many that see them as some kind of scam, or that they are too good to be true. There are no shortage of horror stories of seniors getting ejected from their homes. In reality, there are very few examples of this actually happeneing. A reverse mortgage does, however, slowly siphon the equity out of your home without replacing it. But if a senior intends on staying in their house until the end, and has no heirs, heirs financially able to pay the balance, or heirs for whatever reason uninterested in maintaining the property, a reverse mortgage can be a no-brianer in terms of gaining supplemental retirement income. However, be aware of these few things. If a salesman comes at you with a high pressure or urgent sale, or if the paperwork is confusing and the lender is hesitant to explain, find another provider. 


Top 10 Companies

#1
Our Partner
10 / 10
  • Our # 1 Choice, BBB Accredited, #1 Reverse Mortgage Lender in the nation
  • Meet with a Licensed Professional to discuss your personal needs, depending on your location.
  • Customer service agents readily available 24/7 to answer your questions
  • Approved Member of US Department of Housing and Urban Development
  • Free Information Kit on Pros & Cons
  • 96% Customer Satisfaction Rating
  • Eligibility: Age 62+, $100K+ home value with 50%+ equity
#2
Our Partner
9.5 / 10
  • Save money by easily comparing rates from multiple lenders
  • A+ Rating with the BBB
  • Choose the payout option that works for you
  • No mortgage payments; still pay taxes and insurance
  • Still own and live in your home while receiving cash
  • Generally will not affect your social security
  • When banks compete, you win!
#3
Our Partner
9.0 / 10
  • Up to $20,000+ More in Available Proceeds w/ All-New 2018 Rates
  • Highest Rated of Any Major Reverse Mortgage Lender: Source: BBB
  • A+ Rated by Better Business Bureau – 5 Stars
  • HUD Approved Direct Lender – Over Decade of Experience  
  • Government Insured HECM and Private JUMBO Plans to $2,000,000
  • Offers Free Same Day Quotes by Email & Information Kit
  • Free Calculator, Mobile App & Online Application
#4
Our Partner
8.5 / 10
  • Free Information Kit on Reverse Mortgages
  • Brand is Powered by AAG, The industry leader
  • Proud Member of NRMLA
  • Great customer satisfaction rating
  • US Department of Housing and Urban Development Lender
  • Eligibility: Age 62+, $100K+ home value with 50%+ equity
  • Get Free Download of Reverse Mortgage Guide
#5
Our Partner
8.0 / 10

  • Change the way you look at Retirement
  • Get a Free Quote in seconds
  • Approved Member of Housing and Urban Development
  • Eligibility: Age 62+, $100k + Home Value with 50% Equity
  • Free Reverse Mortgage Guide
#6
Our Partner
8.0 / 10
  • Equal Housing Lender
  • NRMLA Member
  • Member of National Aging in Place Council
  • Borrow up to $2.25 Million with HomeSafe Reverse Mortgage
  • HomeSafe offers no initial disbursement limitation or mortgage insurance premium if qualified
  • Competitive fixed interest rate and lump-sum draw
#7
7.9 / 10
  • Mortgage Calculator
  • Online Quotes
  • Refinance Mortgage Loans
  • New Homebuyer Guide
  • Rated A by the BBB
#8
7.6 / 10
  • Approved by the Department of Housing and Urban Development
  • Online Application
  • Free Reverse Mortgage Guide
  • Member of NRMLA
  • Rated A+ by the BBB
#9
7.3 / 10
  • Free H4P Buyer’s Guide
  • Online Calculator
  • Rated A+ by the BBB
  • Federal Housing Administration Insured
  • No Pre-Payment Penalties
  • No Required Monthly Payment, Interest and Principal
#10
7.0 / 10
  • 2-Step Calculator
  • Rated A+ by the BBB
  • Iron Clad Guarantee
  • Member of NRMLA
  • FHA Insured 
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How We Compare Reverse Mortgages

Lender Details

30%

There are three types of reverse mortgages: single purpose, proprietary, and federally insured. Single purpose reverse mortgages are small in scale and typically offered by non profit entities and municipal government lenders to lower income homeowners. Funds are used for things like home improvements or property taxes. Proprietary reverse mortgages, or jumbo reverse mortgages, are not federally insured and offered by private banks or other lenders. These types of reverse mortgages are not subject to the HECM upper loan limit, so they are usually for higher value homes. However, since these loans are not insured they tend to be more expensive.

The third type of reverse mortgage, and most ubiquitous with regard to our featured companies, is the federally-insured Home Equity Conversion Mortgages (HECMs). Lender details include the lender type, which can be a marketplace/broker/aggregator that offers multiple quotes from competing companies, or a direct lender such as a bank or credit union that issues the loan themselves. It is also important to consider the data regarding the present value of loan proceeds that are available to the borrower, and total number of loans issued by a given company for 2016. We also will be verifying the Nationwide Mortgage Licensing System ID (NMLS ID) and any and all regulatory actions taken against the reverse mortgage lender being reviewed. 

Nationwide Mortgage Licensing System ID

The Nationwide Multi-State Licensing System is a federal record system for licensing and registration of financial services in the United States. In the jurisdiction it operates, the NMSL is the sole licensing and registration service for mortgage companies. This includes the District of Columbia and U.S. Territories of Puerto Rico, the U.S. Virgin Islands, and Guam.


Loans

40%

There are a great deal of factors to consider when assessing the breadth of options and features particular to a given company's reverse mortgage offerings. Firstly, there are different types of HECMs which can be used for different purposes. Loan types can include the traditional HECM, HECM refinance -- when you have an existing reverse mortgage but wish to refinance into another because of more favorable rates or home appreciation, or HECM for purchase, i.e. using a new reverse mortgage to buy a house. It is also important to consider the variety of ways reverse mortgage funds can be disbursed and which one works best for you. Additionally, different reverse mortgage lenders feature different fee structures. Relevant fees can include closing fees, origination fees, maintenance fee, and appraisal fee. Finally, it is essential to measure the actual terms of the loan. Items such as maximum home size, the minimum home equity allowed for qualification, and the starting fixed and variable rates.

Payout Options

When it comes to receiving your funds for a reverse mortgage, there are a few disbursement options. Companies will offer one of or a combination of these:

  • Lump Sum: Borrowers will receive the entire loan upfront.
  • Monthly Payments: Borrowers will receive a portion of the loan every month.
  • Line of Credit: Borrowers can open a line of credit against their equity, but they don’t have to use it.

Closing Fee

When it comes to closing costs, lenders can require any of the following:

  • Flood certification fee
  • Credit check fee
  • Escrow
  • Document preparation fee
  • Courier fee
  • Title insurance
  • Pest inspection

Origination Fee

Origination fees are meant to cover the reverse mortgage lender's operating expenses. The maximum fee is 2% of the initial $200,000 of the home's value and 1% thereafter. The origination fee is capped at $6,000.

Appraisal Fee

An appraiser must not only assess the value of the home, they must also list and document any structural defects and major issues with the property. If there are indeed problems, you must get them taken care of yourself before the loan is originated. An average appraisal fee is $450, with follow up inspections at $150. This fee must generally be paid in cash and is not financed into the loan.

Maximum Loan Size

The current maximum limit for federally-insured HECMs is $636,150. If your home equity is greater than this and you wish to get more from your reverse mortgage, your only option is to go the non-insured, proprietary route.

Minimum Home Equity

You will need a lot of home equity to qualify for a reverse mortgage. Ideal candidates own their home outright or are carrying a small remaining loan balance on their first mortgage.


Consumer Experience

30%

In order to get an accurate picture of consumers' experience dealing with a particular company, we've taken a look at the Consumer Complaint Database. This database compiles over 700,000 complaints, on a range of consumer financial products and services. Complaints are then sent to nearly 3,000 companies, giving them the opportunity to respond. The Consumer Complaint Database doesn't verify all the facts alleged in these complaints, but they do take steps to confirm a commercial relationship between the consumer and the company. Additionally, we looked at Better Business Bureau data, which includes grade and positive/negative complaint percentages, and Trustpilot scores with their associated positive/negative complaint percentages.

We also look at the company's site features and mobile app -- if they have one. Useful site features include reverse mortgage calculators, information kits, educational resources, online chat, etc. 


Customer Questions & Answers

What is a reverse mortgage?

A reverse mortgage is an FHA-insured loan available to homeowners over the age of 62 which enables them to convert their home's equity into cash. It can either be disbursed as a lump sum, monthly payments, a line of credit, or any combination of these. Unlike traditional mortgages, this loan increases in value over time and only becomes due upon the death, or relocation of the homeowner. If the homeowner or their heirs are unable to pay the loan back, either through selling the house or paying it off outright, the loan is covered by the federal government.

How does a reverse mortgage work?

As with home equity loans, reverse mortgages are primarily based on the of amount of accumulated home equity. Reverse mortgages, which are intended for those with paid-off, or small, mortgages, take a percentage of this equity, and pay it back to the homeowner. The resulting funds are typically meant to supplement borrowers’ retirement income.

What does HECM stand for?

HECM refers to the Home Equity Conversion Mortgage program. This program, which is managed by the Federal Housing Administration, allows for the withdrawal of a portion of home equity. Under the tenets of the HECM program, borrowers may select their preferred method of withdrawal. Options include a line of credit or a fixed monthly sum.

What is a reverse mortgage line of credit?

A reverse mortgage line of credit, otherwise known as an HECM line of credit, is backed by the FHA and operates similarly to a traditional HELOC. The key difference is that while HELOCs require monthly repayments, HECM lines of credit defer all repayment until such time as the last borrower dies or vacates the home.