Please be careful of these unethical practices being used by some reverse mortgage loan officers.
• Some loan officers will try to get you to take out all of the funds available even though you don't need the money. They will tell you to pay it back in 60-90 days. They tell you that it will allow them to pay some or all of the fees. What it really means: Lenders get paid huge money based on how much money you take at close. The more you take, the more they make! Unfortunately they are having you commit loan fraud against the sponsoring lender or investor. If found out, the lender can call the loan due. Don't fall for this!
• Another common ploy is to move the closing date on their proposal documents to six months before your next birthday knowing full well you don't want to wait that long to close. What is really means: By doing this, they will be able to show you qualifying for more money than their competitors. (HUD moves you to the next age when you are within 6 months of your next birthday.) When they get the loan approved, they will claim was a computer glitch and you won't get the extra money, but most customers will accept that. You qualify for the same amount of money no matter what lender you choose. The calculations are set by HUD. Always make sure the estimated close date on the loan comparison sheet is within 60 days of the application unless YOU want to wait until 6 months before your next birthday.
• Finally, some loan officers and lenders will jack up closing costs and then show a lender credit. What it really means: They do this to trick you into think they were able to get you a credit on closing costs which makes them look good. In most cases their total costs are more than mine. Always look at the total closing costs.
I will never play with any numbers to try to mislead you. Everytime I give a quote, it is with the real numbers and costs. If I can get a cost waived, I will deduct it from the costs, not add it in and then give a credit.
Reverse Mortgages are an excellent financial planning tool for seniors. These types of unethical practices only hurt the reputation of the industry. Don't use any lender or loan officer that uses these tactics.