How to Choose a Reverse Mortgage Lender

18 October 2025

Thinking about a reverse mortgage? You’re not alone! Many seniors find this financial tool incredibly useful as they look for ways to boost retirement income. But before you dive in, you’ll need to find the right lender—one that’s reputable, trustworthy, and offers terms that actually work for you.

Choosing a reverse mortgage lender isn’t as simple as picking the first name you see online. This is a big financial decision, and like any major life choice, you want to do your homework. So, how do you make sure you’re getting the best deal from the best lender? Let’s break it down step by step.

What is a Reverse Mortgage in Simple Terms?

Before we jump into choosing a lender, let’s take a quick refresher on what a reverse mortgage actually is.

A reverse mortgage is a type of loan designed for homeowners aged 62 and older. Instead of making monthly mortgage payments, you can receive payments—either as a lump sum, monthly disbursements, or a line of credit—by tapping into your home’s equity. The loan gets repaid when you sell the home, move out, or pass away.

Sounds good, right? Well, like any financial product, there are pros and cons. This is why choosing the right lender is so important.

Why Choosing the Right Reverse Mortgage Lender Matters

Not all lenders are created equal. Some have better customer service, some offer lower fees, and others will be more transparent about the fine print (which—trust me—you want!).

A reverse mortgage is a long-term commitment, so you need to work with someone who won’t hit you with hidden fees or misleading terms. You also want a lender that explains things clearly and ensures you fully understand what you’re signing up for.

Let’s go step by step on how to pick the best lender for your needs.

1. Look for FHA-Approved Lenders

One of the first things you should check is whether the lender is FHA-approved. The Federal Housing Administration (FHA) insures Home Equity Conversion Mortgages (HECMs), which are the most common type of reverse mortgage.

Why is this important? FHA-approved lenders must follow strict guidelines, which means you’ll have better protection as a borrower. If a lender isn’t FHA-approved, it’s a red flag that you should look elsewhere.

You can verify FHA-approved lenders on the HUD website (the U.S. Department of Housing and Urban Development).

2. Compare Interest Rates and Fees

Just like with a traditional mortgage, different reverse mortgage lenders offer different interest rates and fees. Even a small difference in the interest rate can add up over time, affecting how much money you or your heirs will owe down the line.

Here are the key fees to watch out for:

- Origination Fees – What the lender charges to set up your loan.
- Servicing Fees – Ongoing costs for managing your loan.
- Closing Costs – Includes appraisal fees, title insurance, and other expenses.
- Mortgage Insurance Premium – Typically required for FHA-backed loans.

Don't just take the first offer you get—compare multiple lenders and negotiate where possible. Yes, negotiation is an option!

3. Check Online Reviews and Ask for Recommendations

Would you trust a restaurant with terrible reviews? Probably not. The same logic applies when choosing a reverse mortgage lender.

Look at online reviews on sites like:

- Better Business Bureau (BBB)
- Trustpilot
- Google Reviews

Also, ask friends, family, or financial advisors if they have recommendations. A lender with a solid reputation is much less likely to engage in shady business practices.

4. Understand Their Customer Service Approach

Getting a reverse mortgage isn’t just a one-time transaction—it’s a relationship. You’ll likely have questions, concerns, and adjustments over time, so your lender should offer excellent customer service.

Ask yourself:

- Do they explain things clearly?
- Are they patient when answering your questions?
- Are they pushy or aggressive? (Hint: If they are, run the other way!)
- Do they provide ongoing support?

A good lender will take their time making sure you understand everything before you sign on the dotted line.

5. Watch Out for Scams

Unfortunately, reverse mortgage scams do exist. Some scammers prey on seniors who may not be familiar with the fine details of these loans.

Here are a few red flags to watch for:

🚩 High-pressure sales tactics – A good lender will never rush you into a decision.
🚩 Upfront fees to "secure" a loan – Legitimate lenders don’t make you pay before processing your application.
🚩 Unrealistic promises – If something sounds too good to be true, it probably is.
🚩 Lack of proper licensing – Always verify credentials before moving forward.

When in doubt, consult a financial advisor or attorney before signing anything.

6. Ask About Loan Repayment Terms

When choosing a lender, you need to fully understand the repayment terms.

Most reverse mortgages don’t require repayment until you sell the home, move out, or pass away, but different lenders have different policies on things like:

- How long your heirs will have to repay the loan
- What happens if you temporarily move out (for example, to a nursing home)
- Whether there are prepayment penalties if you want to pay down the loan sooner

Make sure you get everything in writing so there are no surprises later.

7. Seek Professional Guidance

Even if you’ve done all your research, talking to a HUD-approved housing counselor can help. These professionals provide unbiased advice and can help you evaluate whether a reverse mortgage is even the best option for your situation.

A good lender should encourage you to seek outside advice before making a decision. If they try to steer you away from speaking with a counselor, that’s a huge red flag.

Final Thoughts

Choosing a reverse mortgage lender is a big decision—one that can impact your financial future for years to come. But with a little bit of research, patience, and caution, you can find a lender who truly has your best interests at heart.

Remember to:
✅ Check if they’re FHA-approved
✅ Compare rates and fees
✅ Read reviews and get recommendations
✅ Test their customer service
✅ Watch for scams
✅ Fully understand loan terms
✅ Seek professional advice

A great lender will make the process smooth, transparent, and stress-free. Take your time, ask the right questions, and don’t settle for anything less than the best. Your future self (and your heirs) will thank you!