After a conversation to develop and understand your situation and priorities, we prepare a simple chart unique to your property and long term goals. This becomes the starting point for a more detailed discussion to fine tune how to structure your transaction.
If you don’t know already, you will find out soon. The volume of paperwork given to the borrower is unbelievable. Typically it is:
- An initial proposal – 100+ pages
- Loan application and related disclosures – 300+ pages
- Final loan documents – 200+ pages
Most are legal disclosures and educational material that needs to be provided, but very few actual read.
The average borrower already has a general understanding of a reverse mortgage and is primarily interested in the tradeoffs between the different loan choices:
- Fixed or adjustable – most initial prefer the fixed, but usually choose an adjustable because only it has the credit line to access any remaining portion of the available loan.
- If adjustable, a rate that changes monthly or annual – with rates likely to rises in the coming years, the annual option has less long term risk, but starts at a slightly higher rate
- Who picks the interest rate? The borrower should, although most loan officers do not give the borrower the full range of available rates
- Why does the rate differ between lenders? The higher the rate, the higher the lender rebate to the loan officer/company; Many loan officers only offer to higher rates so they can maximize their commission
- Why do the closing costs swing thousands of dollars between lenders? Some loan officers will use the lender rebate to pay the borrower’s closing costs, others will keep the rebate for themselves
- If I have a credit line with substantial funds available, should I draw money out as needed, over my lifetime or a fixed monthly amount? This depends on the borrower’s situation and the loan officer should counsel the borrower on the tradeoff of the different options
Rather than shuffling through stacks of paper to find the dozen or so pages with numbers and calculations and still not have answers to most of your questions, wouldn’t it make sense for the important numbers to be condensed to a page or 2 – a snapshot comparison – that is customized for your preferences.
We thought so too, so we extract the important numbers and present them on a two page summary of what you need to know to understand your options, no more or less.
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