The best reverse mortgage companies have the potential to transform your standard of living in later life, turning the equity locked in your property into a long-term loan that can give your retirement finances a welcome boost. Provided you’re aged 62+, reverse mortgage companies allow you to access money that can meet a range of different requirements, whether you want to pay off debt, cover medical bills, pass on some wealth to the younger generation, or simply supplement your retirement income.
Yet not even the top-rated reverse mortgage loans should be entered into lightly. The costs, fees and interest associated with them can quickly escalate, which has the potential to negate any financial benefit, and there’s also the risk of withdrawing too much capital and compromising any inheritance you wish to leave behind. For this reason anyone hoping to benefit from housing wealth in the future will always need to be consulted, and seeking advice is essential.
A reverse mortgage won’t be the right solution for younger homeowners, either – they may want to consider the best home equity loans instead – but if you’ve decided to opt for a reverse mortgage loan, it’s imperative you’re able to find the lender to suit. Doing so can not only ensure you benefit from the lowest interest rates, but the very best reverse mortgage companies will also boast competitive fees, exemplary service and a range of different options, offering loan solutions that can cater to a variety of borrowers. Whatever your reverse mortgage requirements, our overview of the leading companies is here to help.
It’s important to reiterate the need to seek specialist support when embarking on this kind of financial agreement; indeed, the complexity is such that it isn’t just recommended, it’s mandatory. All borrowers seeking a reverse mortgage loan must receive counseling from a U.S Department of Housing and Urban Development agency before they can proceed with their application, with counselors on-hand to advise on the process, requirements and potential consequences of these loans, ensuring the agreement is fully understood. Even the best reverse mortgages can be a risky undertaking for those uninformed, so if you feel you need additional resources or information, it could be worth contacting AARP or the National Reverse Mortgage Lenders Association for support.
1. American Advisors Group: Best reverse mortgage provider overall
American Advisors Group (AAG) offers all the information, expertise and experience you would expect from the largest reverse mortgage company in the U.S. The website is well-laid out and brim full of helpful articles and resources, while the application process is clear and fully supported.
If you want an idea of what you might be able to borrow, there is a straightforward calculator that doesn't require you to share contact details, while there are a number of different loan types to choose from too.
For those wanting an indication of costs, generic fee information is relatively easily found, although the charges specific to you will only become apparent when you speak to a customer service specialist. Thankfully, however, it is in terms of customer service that AAG truly excels, with past patrons extremely generous in their praise of a company that is consistently marked highly for its professionalism, transparency and knowledge.
- Read our American Advisors Group review
2. Liberty Reverse Mortgage: Best for information and support
Liberty Reverse Mortgage is open, accessible and widely-praised by its past customers. Its application process is straightforward, all of the reverse mortgage information you might need is easily found, and there is even some welcome transparency over the type of costs you might face.
So confident is Liberty in its ability to deliver that it is willing to make promises to its customers too. If you find a competitor that Liberty cannot beat on rate you will receive a $100 gift card, while if you have to wait longer than 60 days to close your loan, $500 will be credited to help pay towards your closing costs. A small gripe might be that you have to supply your phone number in order to find out if you're eligible for a loan - this means a call from Liberty is still likely even if you don't wish to proceed.
However, with some excellent customer reviews, there is a good chance that you will like what you see. And if you feel slightly let down at any point, you will probably find that Liberty has a guarantee in place to make sure that any disappointment doesn't linger.
- Read our Liberty Reverse Mortgage review
3. Finance of America Reverse: Best for customer satisfaction
Finance of America Reverse ticks almost all of the boxes in terms of its website, with stacks of information clearly explained about reverse mortgages, its own products and retirement as a whole.
The range of products on offer is excellent too, with a jumbo loan solution sitting aside its more traditional FHA-insured reverse mortgage and reverse for purchase mortgage. There are also a number of useful extras, such as the reverse mortgage calculator and a personality quiz to find out what type of product would be most suited to you.
While a more in-depth explanation over the application process wouldn’t go amiss, the consistently outstanding customer satisfaction ratings that Finance of America Reverse receives suggests this reverse mortgage company won’t disappoint.
- Read our Finance of America Reverse review
4. One Reverse Mortgage: Best for variety of loans
One Reverse Mortgage is where you should turn if you want a reverse mortgage that is slightly beyond the norm to those available elsewhere.
The pride of its reverse mortgage stable is the Home Equity Loan Optimizer - HELO for short - that provides a solution for those who may not qualify for a Federal Housing Administration (FHA) loan. With this particular product, you can say HELO to higher lending limits and goodbye to property restrictions and mortgage insurance premiums.
The website is extremely easy on the eye, but mostly for information purposes only, with a phone call the recommended path to get an application under way. There is a useful payout calculator that doesn't require contact details to get an answer, and a broad range of support material that carefully explains the finer details of reverse mortgages. If you're looking for something extra, there are also some rather more eclectic articles aimed at educating seniors in the art of yoga, among other things.
While customer reviews are excellent on Trustpilot, those available elsewhere perhaps suggest a little bit of caution might be wise. However, if you have more specialist reverse mortgage needs, and want a lender with a steadfast company behind it, One Reverse Mortgage could be for you.
- Read our One Reverse Mortgage review
5. Longbridge Financial: Best for transparency
Longbridge Financial wants to make the reverse mortgage process as straightforward as it possibly can for customers. All of the information and supporting articles are written using the simplest language possible and what you can expect on your journey to accessing your equity is outlined at the start.
The website is highly accessible and the depth of guidance within the ‘News & Information’ section is impressive too. The traditional reverse mortgage and for purchase solutions cater to those with more standard needs, while the Platinum option allows those with higher value properties to access more cash than is possible under FHA-insured solutions.
An indication of how much you might be able to borrow without having to share your contact details would be welcome, along with more information on fees. However, when Longbridge does get in touch, its outstanding customer service ratings suggest the experience will be among the most pleasant you can expect from the best reverse mortgage companies.
- Read our Longbridge Financial review
LendingTree: Best comparison site
LendingTree provides access to a number of well-known reverse mortgage companies on the completion of one straightforward application. Using LendingTree saves potential borrowers time as you only need to fill out your details once in order to be presented with the reverse mortgage terms that its partners are willing to offer you. And as they are competing against each other for your business, you can be sure they will be providing competitive rates.
Exactly what a reverse mortgage is, who it is good for, and all manner of other related topics are explored in depth by LendingTree on its excellently presented website. The reverse mortgage calculator can quickly give you an indication of how much money you might qualify to receive too. However, given how LendingTree works, you will need to share your contact details in order to receive your quotes, potentially leading to calls from a number of lenders.
While this may deter some, the number of proposals you receive back for giving up relatively little of your time should outweigh this negative for most. As a marketplace that can put you in touch with a large number of reverse mortgage companies fast, there is little that can compare with LendingTree.
- Read our LendingTree review
How a reverse mortgage can help you age in your home while supporting you financially
For all its benefits, retirement can often leave you more vulnerable to financial distress. Taking out a reverse mortgage is just one option for addressing your credit and financing needs. Because home equity conversion mortgages (HECMs) are federally backed and regulated, there isn’t a huge difference among competing lenders’ products (though you should still shop around for the best deal, of course). But there are other ways to ease your financial burden and increase cash flow while aging in place. Knowing all your options can help you make smarter decisions.
Reverse mortgage (HECM)
A home equity conversion mortgage (HECM) allows homeowners who are 62 or older to take out a loan or line of credit against their home equity that does not need to be repaid until the borrower (and any non-borrowing spouse) moves or dies. Because the loan is backed by the Federal Housing Authority (FHA), certain fees and limits are set in stone. The amount you can take out is based on your home equity, your age and the interest rate. At a 4.5 percent interest rate, a 62-year-old may be able to take out a reverse mortgage for up to 43.9 percent of the home’s value (with the value capped at $765,600). You can take out only 60 percent of that limit in the first year, unless you need more to pay off an existing mortgage and related obligations. After the funds pay off the existing mortgage, you can take out the remainder of the 60 percent as a lump sum or choose to have it available as a line of credit, which will have an adjustable interest rate. One advantage of the line-of-credit option is that any unused credit grows and compounds at the same rate as the loan’s interest rate.
While you don’t need to make payments on the loan as long as you live in your home, you will still be responsible for paying property taxes and homeowners insurance. Failure to pay those has resulted in many reverse mortgage foreclosures in recent years.
One big benefit for borrowers or their heirs is that reverse mortgages are “nonrecourse” loans: If the home’s value drops below the amount of the loan, borrowers won’t have to pay back the difference. When the loan is payable, they can either relinquish the home or pay back 95 percent of its current value.
Reverse mortgage for purchase
Many people think of reverse mortgages as a way to stay in the home they’ve owned for decades, but since 2008 it has also been an option for seniors who would like to purchase a new home. The same limits and rules apply, so you would only be able to use the mortgage for a percentage of the purchase based on your age. But a reverse mortgage for purchase is an option for anyone looking to relocate without having to make new mortgage payments, especially if their new home costs more than the equity they have in their old one.
Jumbo reverse mortgage
This is a product available in some states, and from select lenders, that is not backed by the government. The interest rates are higher, and these are not nonrecourse loans. But if you live in a condo that is not approved by the FHA or in a coop apartment, a jumbo loan would be your only option for a reverse mortgage. It’s also a way to access equity for a home worth more than the HUD cap of $765,600.
Forward mortgage refinancing
This is one avenue you may have written off, knowing it’s much harder to get a new loan when you are no longer employed. But it’s not impossible. Speak to your current mortgage lender to talk about your options for loan modification or refinancing. Though banks usually calculate mortgage qualification based on income, some now consider annuitized assets as well. They calculate what 70 percent of the money in your retirement funds would look like divided by the number of months in the loan for which you are applying (for example, 360 months for a 30-year mortgage). Your retirement assets must be liquid to qualify for consideration.
You should also talk to a housing counselor – either someone at a nonprofit senior center you already know and trust or a specialist listed on the HUD database – to discuss other available options. Some programs that were set up in the wake of the 2008-2009 housing crisis, such as the Hardest Hit Fund, are still available to offer modifications for those who have no equity or are underwater on their mortgages. You can speak to a HUD counselor anytime by calling the department at (888) 995-HOPE (4673).
Other options for credit and financing
Other specialized loans
There are loans designed for specific, short-term needs, such as home improvements, medical bills and home energy costs.
If you have a permanent life insurance policy, you may be able to take out a loan against it, cash it out or even receive living benefits. Check with your insurance provider to discuss your options.
‘The Family Bank’
“There have been several times over the years when I’ve met with the families, and they really didn’t realize that their parents were in such a precarious financial situation,” says Alfie Schloss, a licensed reverse mortgage originator in New York.
Rather than have their family member take out a reverse mortgage, which has high closing costs and generally higher interest rates than traditional mortgages, the rest of the family can opt to pool their resources and keep the banks out of it. If anyone is concerned about the fairness of this transaction, or worried about the consistency of such an arrangement, an attorney experienced in estate law can draw up a formal agreement for the family. In essence, the arrangement is a kind of reverse mortgage in which the adult children are both heirs and lenders (usually without charging their parents interest).
Government benefits and assistance programs
In many cities and states, seniors who earn less than a set annual income can apply for property tax exemptions. In New York, for example, anyone over 65 who earns less than $29,000 a year can pay 50 percent less in property taxes.
The federal government also offers programs to help low-income individuals and families pay for home energy and for weatherizing their homes to reduce energy costs. States may offer even more help with those costs.
You may also be eligible for assistance paying for other utilities, food and health care. The National Council on Aging has a BenefitsCheckUp tool that can find what is available to you. Or you can visit a local senior center, where experts can guide you through the process of registering for benefits.
As tantalizing as reverse mortgages may be – particularly with celebrities endorsing them at every turn – there are other options available for securing credit or financing in your senior years. As with all financial products and services, there are many professional and nonprofit resources available where you can find answers to your questions without dipping into your pockets.