Quick Answer
Compare reverse mortgage offers by requesting a written Loan Estimate from each lender and comparing the origination fee, interest rate, effective accrual rate (rate + margin + annual MIP), total closing costs, and projected net proceeds — with the lender who shows the best combination of low costs and competitive rate winning the comparison.
- Request a written Loan Estimate from at least two lenders — both CRMP.
- Compare origination fee (HECM: capped at $6,000; proprietary: uncapped).
- Compare the interest rate margin — lower margin = slower balance growth.
- Compare total closing costs on Page 2 of the Loan Estimate.
- Compare projected net proceeds after all costs and payoffs.
- Ask each lender: 'What is the effective annual accrual rate on this loan?'
Key Facts
| Topic | Key Fact |
|---|---|
| Loan Estimate | Standardized federal form — same categories across all lenders |
| Origination fee location | Page 2 of Loan Estimate — Origination Charges section |
| Rate comparison | Look at the margin, not just the index — lower margin is better |
| Total cost location | Page 2 — all closing costs itemized |
| Net proceeds | Principal limit minus all costs and payoffs |
| Time required | 1 to 2 hours to get and compare two Loan Estimates |
| CRMP designation | Both advisors should hold CRMP — verifiable at nrmlaonline.org |
| Red flag | Any lender who discourages getting a second Loan Estimate |
Detailed Explanation
The standardized Loan Estimate form makes reverse mortgage comparison straightforward — every lender uses the same format with the same category labels. A borrower who receives Loan Estimates from two lenders can place them side by side and directly compare every cost line. The primary comparison points are the origination fee (Section A), the interest rate and margin, and the total closing costs (Page 2 summary).
For HECM loans, the origination fee is the most significant lender-controlled variable — capped at $6,000 but varying below that cap. Some lenders charge $4,000 to $5,000; others charge the full $6,000 cap. The FHA MIP is the same for every FHA lender (2.0% upfront, 0.5% annual) — this line item should be identical on both Loan Estimates. If it differs, one lender has made an error.
The interest rate comparison for HECMs is more nuanced than for conventional mortgages because the rate is variable and based on an index (CMT or SOFR) plus a lender margin. The index is the same for all lenders using the same index. The margin is the lender's variable — lower margin means slower balance growth over the loan's life. A Loan Estimate showing a 2.0% margin versus 2.5% margin on the same index produces meaningfully different long-term costs despite looking similar at origination.
For proprietary reverse mortgages, the comparison is even more important because there is no federal cap on origination fees and no standardized comparison form (though lenders should provide equivalent cost disclosures). The origination fee variation between competitive and non-competitive proprietary lenders can be $20,000 to $30,000 on a single California high-value home transaction. Jay provides a written Loan Estimate or equivalent disclosure for every consultation and encourages — actively encourages — borrowers to compare it against another lender's proposal.
Jay Zayer, CRMP — 18 Years Experience
The borrower who calls me back after getting a second Loan Estimate and says 'your numbers were better' is my favorite client — not because I won the comparison, but because they did the right thing. They verified the quality of what I offered. That verification is what consumer protection looks like in practice. I tell every client at the end of the initial consultation: before you submit the application, get one more Loan Estimate from another CRMP. If they are lower, take it. If I am lower, you know you made the right call.
Who This Is Right For
This may be a good fit if:
- Every reverse mortgage prospect preparing to choose a lender
This may NOT be the right fit if:
- There is no situation where comparison shopping would be inappropriate — it is the single most effective consumer protection action available
Common Misconception
Myth: All HECM lenders charge the same amount because it is a government program.
Fact: FHA MIP and the origination fee cap are standardized, but the origination fee itself (up to $6,000), the interest rate margin, and third-party costs all vary between lenders. Comparison shopping is essential.
Source: CFPB: Mortgage comparison guide
Authoritative Sources
- CFPB: Comparing mortgage offers — consumerfinance.gov
- NRMLA: Consumer protection resources — nrmlaonline.org
- HUD: HECM consumer guide — hud.gov
People Also Ask
What should I compare on two reverse mortgage Loan Estimates?
The origination fee, the interest rate margin, the total closing costs on Page 2, and the projected net proceeds after all costs and payoffs.
The two Loan Estimates have the same FHA MIP — is that correct?
Yes — the FHA MIP is 2.0% upfront and 0.5% annual for all HECM lenders. It should be identical on both Loan Estimates.
One lender is offering zero origination fee — is that better?
Not necessarily. A zero origination fee typically comes with a higher interest rate margin. Calculate whether the rate trade-off costs more than the $4,000 to $6,000 saved at closing — Jay models this for every no-cost comparison.