reverse mortgage cost comparisons

The best way to compare each lenders reverse mortgage offers is to print each offer then compare them side by side. It might help to do a list with the programs on the left and the lenders names on the top. It’s getting harder and harder to compare offers, as each lender is offering different programs at different costs. First determine what your goal is. Do you need the maximum amount available? Do you want cash, but aren’t concerned about getting as much as possible, but want to keep the costs down? Are you trying to retain the equity in your home? Is cost effectiveness your goal? These are really important questions as each of these questions will help you decide which program to go with. Fixed rate programs require you use all the proceeds up front. This is not in everyone’s best interest, especially if you are trying to create monthly income. Many brokers push these on borrowers because they (currently 7/2010) make good money on them, and because borrowers get the most money available because the expected rate is currently at the floor (it can’t go any lower). These make great sense if you intend on using all of the proceeds upfront. Adjustable programs go from a LIBOR175 to a LIBOR 300. The higher the number, the higher the interest rate. Often times, the higher the number, the lower the upfront costs. Make sure you are comparing like programs, as there is a wide range of costs on these from program to program. Now, what to compare: Rate: Make sure you are comparing the interest rate. Get the lowest rate at the best upfront costs. Monthly svc fee: some are being waived right now on the fixed and higher LIBOR products. They usually range from $25 -$35. This is NOT an upfront fee. The lender sets this aside (like an escrow account) and you draw from it each month. It does decrease how much is available to you, but not like a fee. If you never use all of it, it’s just unused equity in your home. Origination fees: For the fixed rate loans, most origination fees are being waived entirely. Lower rated LIBOR loans are still charging up to the max (2% of the first 200k, 1% thereafter with a cap of $6000) The goal is to determine which product best suits your needs, and then compare that product side by side.

Very Odd...That was a nicely formatted reply when I posted it, now its a big blob of words.

I apologize that its hard to read.

Tam

Each Lender will provide you with a Reverse Mortgage Benefits summary page, or Reverse Mortgage Comparison, that'll show you the following fees: Monthly Service Fee, Origination Fee, Mortgage Insurance Premium, Other Closing Costs (escrow, title, flood certificate, etc.)

Those four sections determine your bottom line - the "Net Principle Limit". That's how much cash you're going to receive after you've paid off your exisitng mortgage (if applicable) and the fees. Make sure each Lender uses the exact same value for your house, and payoff of your mortgage lien. Also make sure they use your real Date of Birth. Some Lenders will use January 1st of the year you were born, making your older, which could provide more cash. You want to be comparing apples to apples, not apples to oranges.