Note: While we have spent extensive time researching and interviewing experts on the best reverse mortgages companies and their suitability for seniors aging in place, a home equity conversion mortgage is not right for everyone. As with most financial products and services, there are many pros and cons to reverse mortgages. For a full understanding of your options, always consult with a financial adviser or housing counselor. Aside from the resources detailed here, the U.S. Department of Housing and Urban Development (HUD) maintains extensive information and connections to financial professionals who can help you understand your credit and financing options. Other resources include the National Reverse Mortgage Lenders Association and AARP.
Reverse mortgages have a mixed reputation. For some, they’re a lifesaver. A financial boon to take them through tough times and retirement and into a relaxing, fulfilled future. For others, they’re the financial solution to be avoided at all costs because they are risky, expensive and can lead to increased debt and financial discomfort. The person you end up being depends on your lifestyle, expectations and understanding of the reverse mortgage market.
The truth is that not all reverse mortgages are created equal, nor are they all open and transparent about the related fees and processes. You need to work with a company that understands the importance of providing you with excellent information and supporting you throughout the process. Some offer counseling, others offer hands-on and personalized engagement, but all those listed here have had fantastic customer reviews and have proven themselves to be a good place to start when looking for a reverse mortgage partner.
1. American Advisors Group: Best for choice and reliability
A reliable and trusted reverse mortgage solution that’s verified by customers and reviews
Application process: Downloadable information kit, traditional phone and mail application process | Interest rates: Fixed, variable, initial interest rate (IIR), expected interest rate (EIR), compounding rate | Fees: Credit report, flood certification, escrow, appraisal, closing, document prep, recording, courier, title insurance, pest inspection and survey
AAG has really good customer reviews for a financial institution and it is accredited with the Better Business Bureau. The company is well known, has a solid reputation and provides you with decent support and guidance as you move through the reverse mortgage process. What makes AAG stand out is how much choice you have for interest rates, loan types, and structured reverse mortgage packages. This is where you want to go if you want to explore more than just the usual options.
2. Liberty Home Equity Solutions: Best for information and support
A trusted reverse mortgage provider that’s made an impact on the market since its debut in 2004
Application process: Downloadable information kit, traditional phone and mail application process | Interest rates: Fixed, variable | Fees: Closing costs, FHA upfront mortgage insurance premium, origination fee, title and closing settlement fees, appraisal, counseling fee, wire fee, flood certification and credit report
Liberty Home Equity Solutions is one of the most widely praised reverse mortgage service providers on the market. Its processes are seamless, the information accessible, and costs reasonable. The company has had the best reviews from customers out of all those reviewed on this site with exceptional 4.5 stars on Consumer Affairs – an almost unheard of achievement in this market. Liberty Home Equity Solutions isn’t designed for speed, it’s designed for efficiency. Right there, on the landing page you will find the calculator, the free eGuide, and links to articles that explain the process, the pros and cons, the fees and the eligibility requirements. Liberty Home Equity Solutions has made it as detailed as possible for anyone starting out with the reverse mortgage process to find what they need.
3. InterContinental Capital Group (ICG): Best for customer satisfaction
ICG creates customized reverse mortgage solutions to suit different lifestyles and requirements
Application process: Registration required | Interest rates: Fixed, variable | Fees: Not disclosed upfront
ICG has the worst website of all those reviews. The information is sparse, the details limited and the experience very frustrating. You have to just pick up that phone and contact someone at the company to get started. Once you’ve done that, however, according to customer and industry reviews, ICG offers you one of the best experiences on the market. Most of those who have given the company its 4.5 stars on Consumer Affairs and 4.9 stars on Better Business Bureau have said they heard about it from someone else and were not disappointed. The application process and information on the site may be sparse, but you are looking at a company that’s achieved impressive traction based on how well it delivers to its users.
4. One Reverse Mortgage: Best for variety
A member of the Quicken Loans stable with a solid foundation in finance
Application process: Online information kit, traditional and digital application tools | Interest rates: Fixed, variable | Fees: Origination fees, servicing fees, mortgage insurance premium, appraisal fees, escrow costs, title fees
One Reverse Mortgage is a subsidiary of Quicken Loans and is completely dedicated to the world of reverse mortgages. It hasn’t had fabulous customer reviews, but it does have plenty of variety in loan types and provides a lot of helpful information to make the process really easy. You will enjoy the comprehensively clear application process, interest rate explanations, the calculators and the various tools the company has included on the site. The company may have mixed customer reviews but it has a solid foundation and impressive reverse mortgage solutions. It’s HELO product does elevate the offerings significantly and it allows for people from different life situations a chance to have a reverse mortgage which may be denied to them elsewhere.
5. Homebridge Financial Services: Best for transparency
A multi-service financial services company with a reputable reverse mortgage solution
Application process: Online information kit, personalized application process | Interest rates: Fixed, variable and five flexible payment options | Fees: insurance, origination fee, closing costs, lending fees
Homebridge Financial Services has paid attention to what people want to know before they embark on the process and have endeavored to put it all in front of you from the start. Homebridge Financial Services is transparent about pretty much everything. The company has made it easy to find the costs, easy to locate the fine print and it’s made the various hiccups and concerns that often surround reverse mortgages very easy to understand. They put the information in front of you so that you can make an informed choice right from day one.
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- Home Equity Loan vs HELOC
How reverse mortgage 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 $679,650). 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 $679,650.
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 HARP and 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
VA home loans
Other specialized loans
There are loans designed for specific, short-term needs, such as home improvements, medical bills and home energy costs.
‘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.