Reverse mortgages are still in their infancy in terms of market size and lender competition. Unlike standard mortgages or home equity loans, you won’t find loan comparisons in the Sunday paper or big online services like Lending Tree serving up multiple reverse mortgage lenders eager to “compete for your business”.

In large part this is because many of the fees and costs associated with reverse mortgages are standardized by federal rules and regulations. For example, on HUD HECM loans, the most common type of reverse mortgage, premiums for mortgage insurance (MIP) and lender origination fees (the two biggest costs) are dictated by federal rules and are pretty much the same across all lenders.

Similarly, interest rates are fairly standard although in recent months lenders have started adjusting their margins - a clear sign that competition is heating up and lenders are finding ways to make their products stand out.

Still, it is worthwhile to comparison shop. In addition to fee and interest differentials, other factors like lender’s experience and reputation, how conveniently you can access funds through a line of credit or the user-friendliness of loan statements are important considerations. The best way to comparison shop at this point is to visit lenders’ websites and use their online reverse mortgage calculators

There is one online service that does some of the work for you. Top Reverse Mortgage Lenders Weekly Review takes the trouble to visit each week more than 30 online reverse mortgage lender calculators. They provide a straightforward summary of net cash available as computed by the lenders’ calculators using a standard set of inputs. Another nice feature is that they provide direct links to the lenders’ calculators so that you can input your own info.

This is a useful tool, but be aware of the following:

• Online calculators obviously provide only estimates. Don’t base decisions solely on calculator results. Speak with the lenders and ask for references and credentials.
• Understand the results shown on the Top Reverse Mortgage Lenders Weekly Review website are for one set of inputs and one specific loan type. Results could be much different for your circumstances.
• Calculator results are amazingly uniform both because of the standardization discussed above and because lenders generally use calculator programs licensed from a small handful of companies.
• Don’t assume all the lenders listed are available to you. Not all lenders service all parts of the country. In some rural areas there may be very few reverse mortgage lenders available.
• In addition to the lenders’ calculators, it’s a good idea to visit the online calculator sponsored by AARP to compare with results from the lenders’ calculators. You’ll typically get very similar (or identical) results, but you’ll at least know the results are from an independent source.
• If you find a lender that appears to have particularly attractive calculator results, ask them to explain the reasons why their results are materially different.

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