If you’re interested in a reverse mortgage on your home you probably already know that you have a few options available to you, and choosing the right one requires a little research. You’re not completely alone in the endeavor, however, as the entity you choose to work with for your reverse mortgage can help you navigate the many calculations and terminology. Which one is better to work with- a broker or a lender?
The Differences
‘Direct lender’ or simply ‘lender’ is a term used in the mortgage industry to refer to a bank, credit union, or non-bank lender. They underwrite and finance mortgage loans.
A broker acts as an intermediary between you and a wholesale lender. Brokers are often smaller than banks. They shop around to compare your options with different lenders and can negotiate terms for you.
The Pros and Cons of a Lender
Because of the involvement of an additional party, working with reverse mortgage brokers can take a little longer than an arrangement that’s between you and a lender. They work on the loan from start to finish, and they have more say over the process as a whole. You’re likely to have a decent experience by going through a financial institution you already know.
Because the loan officer you’re working with is employed by the lender, they can only offer you the options made available by that particular financial institution. A lender isn’t required to disclose how much they’re making, and since they earn commission for originating loans they may be less willing to negotiate. You may end up paying more as a result.
The Pros and Cons of a Broker
A reverse mortgage broker gives you many more options to choose from, as they shop around for you. You aren’t limited to what’s offered by one lender. They can use all of your financial information, from your income to your credit history to employment verification, to find what works best for your situation. This is especially useful if your financial situation makes it difficult for your application to be approved; things such as your FICO score can affect the odds or approval. Applying for multiple different loans only to have your application denied is very time consuming, and a mortgage broker spares you that frustration. Their compensation is explicitly stated on a closing statement.
A loan that’s been brokered may take longer to close, however, and because the broker doesn’t work directly for the lender they have less control over the process.
The Final Verdict
If you prefer having someone available to you after the loan has been closed, and someone conscientious of the bigger picture, using a broker to calculate your reverse mortgage is the best option. Using a broker makes the overall experience much more personal. At South River Mortgage we value our clients as actual people, not paychecks. Contact us by phone or email today to learn more about our highly flexible financing options.
