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When you are looking at multiple reverse mortgage programs, there are many factors that you will need to consider. In order to choose the best program for you, you will need to make sure that you consider all of your options. Here are the basics of how to compare reverse mortgage programs successfully.
One of the most important things that you will need to compare is the interest rate that is being offered by the lender. Even though you will not be making mortgage payments to the lender, you still want to secure the lowest interest rate that you can. The interest is going to come out of the equity in your home. This means that the higher the interest rate, the lower the amount of equity that you will be able to gain access to. In order to maximize your equity and receive payments as long as possible, you need to get a lower interest rate. Otherwise, you will essentially be throwing away part of the equity that you have worked so hard to gain.
You also need to compare all of the fees and closing costs that are associated with your loan. When you get a reverse mortgage, all of the closing costs can be financed into the loan itself. For this reason, many people do not take the time to compare the fee structure of each lender. If you do not look at how much you are being charged in closing costs, you could be throwing away thousands of dollars. Typically, you will have to deal with an origination fee, mortgage insurance, third-party closing costs, and possibly a service fee. By the time all of these fees are added in, you are talking about a substantial amount of money. You want to try to find a lender that has the lowest closing costs available. Otherwise, you will be cutting into the amount of home-equity that is available to you yet again.
You also need to compare the maximum loan amounts from each lender. Depending on what program you are looking at, there may be maximum loan amount that you will have to deal with. Certain programs have a maximum amount that can be borrowed depending on which county or state you live in. If you have a larger house, you may not be able to borrow as much money as you would like with certain programs. Therefore, it is essential that you look at the maximum loan amounts of so that you can find a loan program that will fit your needs.
You should also look at the different payment options that are available to you. For example, you may be able to receive a fixed monthly payment for the life of the loan. However, in addition to this, some borrowers will provide you with a home-equity line of credit instead of a monthly payment. Look at the different payment options that you have an choose a lender that works best for you.
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