Review of Finance of America Reverse Mortgage

Fastest Application and Closing Process

Finance of America offers reverse mortgages as another tool to support senior retirement planning. When seniors run into unexpected financial difficulties, it’s often critical to making funds, like those tied up in home equity, available as quickly as possible. Finance of America offers reverse mortgage options that use a fast, streamlined application process to get senior homeowners the money they need when they need it. 

The fast application and closing process offered by Finance of America make it one of the best reverse mortgage companies available. Since federal regulations govern many of the details of a reverse mortgage, fast processing makes Finance of America a clear leader in the industry. 

Overview of Finance of America

Finance of America is the nation’s fourth-largest reverse mortgage lender. In addition to reverse mortgages, the company offers a variety of financial services including student and commercial loans. The company strives to offer transparency in all of its lending. FAR’s website for reverse mortgages includes a wealth of informational videos and documents to clearly explain what you can expect when taking out a reverse mortgage. 

What Fees Does Finance of America Charge?

Most reverse mortgage companies charge origination fees and push all closing costs off onto the lender. At Finance of America, there are no loan origination fees and the only cost to borrowers is the cost of a home appraisal. For traditional home equity conversion loans, there may also be counseling fees for the government-regulated and required financial counseling that must be completed to qualify for the loan. 

Fees can often be rolled into the loan, so seniors have little to no upfront cost when trying to secure additional funding through a reverse mortgage. Another benefit is that borrowers don’t pay a mortgage insurance premium to secure their loan with Finance of America. 

Full Review of Finance of America’s Features

Finance of America offers several reverse mortgage options, each of which may be attractive to the right borrower. Traditional, fixed-rate HECMs offer stability, while an adjustable-rate HECM provides more payout options. Where available, a private reverse mortgage may be the best option for those with high-value homes. 

FAR’s HomeSafe

FAR’s HomeSafe program is a private reverse mortgage option that allows seniors to exceed the cap on traditional HECM lending. For homes valued at more than the $726,525 available through traditional HECMs, HomeSafe is an option. These private loans can offer as much as $4 million at closing, depending on the value of the property. There are many potential benefits to choosing a private lender. 

Mortgage Insurance is Available

While private reverse mortgages aren’t FHA-insured, private loan insurance is still an option. You can get the same level of protection from a private insurance company and enjoy peace of mind and a larger potential loan amount. 

Avoid Paying for Counseling

HUD counseling is required with traditional HECM loans, but it isn’t free. While you still need to go through financial counseling when opting for a HomeSafe loan, you can do it through FAR at no cost. 

No Origination Fees

Traditional HECMs can come with origination fees of up to $6,000 just to generate the loan, but with FAR’s private loans, you can look at options with no origination fees. 

Quick Closing

Borrowers with all of the documentation and clear title who respond quickly with needed paperwork could close on their loan in as little as three weeks. 

How to Qualify

The HomeSafe program requires participants to:

• Be at least 62 years old
• Own a high-value property
• Have a mortgage all or mostly paid down
• Meet with a FAR financial counselor
• Take and pass a financial assessment and credit check
• Live on the property

HomeSafe is not available in every state. For seniors who live in one of the 22 states in which this private reverse mortgage program is available, it might be a good option for those who have homes with valuations that exceed the cap on HECMs. 

Adjustable-Rate HECM

Finance of America is an FHA-licensed reverse mortgage lender and the company is a member of the National Reverse Mortgage Lenders Association. HECM loans are very similar, regardless of the lender due to federal regulations that all lenders must follow. Adjustable-rate loans offer some clear advantages to some seniors. 

Flexible Payout Systems

With a fixed-rate HECM, you typically must take the entire loan as a lump sum payment. Adjustable-rate reverse mortgages offer much more flexibility. With this option, you can take everything as a lump sum or you can open an increasing line of credit to handle expenses as they occur. Another option might be to get monthly disbursements from your loan, helping to improve cash flow. Not all payout options are available in all states, so be sure to discuss the options with a FAR loan officer.

No Housing Debt

With a HECM, any heirs never inherit debt based on a HECM. These non-recourse loans rarely exceed the value of the property, but when they do, the FHA-insured loan means that heirs don’t pay the difference. 

Fixed-Rate HECM

A fixed-rate HECM is much like a fixed-rate standard mortgage in that the interest rate is locked in at the time the loan is generated. The borrower gets all of the money when the loan closes and pays the same interest rate for the duration of the loan. Borrowers can choose to take out some of their home equity or only borrow what they need for immediate expenses. Keeping loan amounts low may provide an opportunity to refinance and pull out more cash later during retirement. In general, all regulations that affect an adjustable-rate HECM also impact a fixed-rate HECM, including the required HUD counseling prior to closing. 

Who Should Consider Finance of America?

Financially Stretched Seniors

For seniors still paying a mortgage at retirement, a reverse mortgage can be a great way to get rid of monthly payments. During closing, paying off the existing mortgage is part of the reverse mortgage process. Seniors struggling on a fixed income may go from missing mortgage payments to cash flow positive with a single transaction. 

Seniors with Limited Savings

Seniors who don’t have a lot of savings may have much of their wealth tied up in their homes. A home represents the single, largest purchase for many seniors, but it doesn’t offer much liquidity. With a reverse mortgage, seniors can use their homes as ways to generate cash when needed. 

What Are People Saying About Finance of America?

Borrowers who close with Finance of America often praise the company for its fast and easy loan process. Seniors often mention clear communication and reminders to help them stay on top of what’s needed to get their loan from application to closing day. FAR’s loan officers get high marks from virtually every senior who’s worked with the company on a reverse mortgage, with many mentioning that their lender was always available to take a call or answer questions. 

On ConsumerAffairs, FAR has thousands of positive reviews, many of which highlight the exceptional customer service and speed of closing as one of the top reasons to choose this lender.

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