About All Reverse Mortgage
All Reverse Mortgage is an online direct lender who only offers reverse mortgages, also known as home-equity conversion mortgages (HECM).
They claim their customer service, government backing and expertise are what makes them different than other reverse-mortgage lenders.
The company’s real name is United Southwest Mortgage Corporation, who is, according to Bloomberg, is based in Orange, Calif., and can be reached at (714) 603-9605.
You might think it’s weird that United Southwest is operating under a different name, but this is more for marketing purposes than anything else.
Consumers looking for reverse mortgages are more likely to go to a website named “All Reverse Mortgage” than they would if the site was named “United Southwest”.
United Southwest was founded in 2004 by Mike Branson, the company’s current CEO. Branson has more than 30 years of experience working in the mortgage business. Marketing specialist Cliff Auerswald has nearly 20 years’ experience in the mortgage business.
The company is part of the National Reverse Mortgage Lenders Association, a group of companies who work in the reverse mortgage industry.
Is All Reverse the right company for you?
We’re going to help you answer that question by walking you through the questions you should be asking as you compare reverse mortgage lenders:
- What is a reverse mortgage?
- What does All Reverse Mortgage offer?
- What are their fees?
- What are people saying about them?
- What do the experts say about reverse mortgages?
Once we answer these questions, we’ll wrap up with our general thoughts about All Reverse Mortgage.
What Is the Difference Between Mortgage & Reverse Mortgage?
In its simplest form, a mortgage is making monthly payments to your lender on a loan they gave you to buy the home. The goal? To get the title.
So, let’s say you buy a house for $185,000 using a bank loan. You’ll end up paying around $1,400 a month for 30 years. While you’re making those payments, the bank owns the title to the house, which is the legal document that says, “So and so owns this house, legally speaking.”
Once you make the final payment on your loan, the bank gives you the title to the house and you are the official and legal owner. Instead of making a hefty mortgage payment every month, you’re left with modest property tax and homeowners insurance payments.
Reverse mortgages are the opposite of this. Instead of you paying back the bank over time to get ownership of your house when your loan ends, the bank pays you a certain chunk of money up front to collect fees and interest rates and, when you die, the remaining balance on your loan.
How a Reverse Mortgage is Calculated
With a mortgage, what the bank loans you is based on the appraised value of the house. In a reverse mortgage, what the bank pays you is based on your home’s equity, or its appraised value minus anything you owe on it.
So, let’s say your neighbor Betty is considering a reverse mortgage. Betty’s house is worth $200,000 and she’s paid off her mortgage. Her equity is $200,000.
Who Is Eligible for a Reverse Mortgage?
HECMs were created as a way for retirees to tap into their home’s equity to pay for retired life, whether that means covering weekly grocery bills, medical expenses, taking a round-the-world cruise or buying a second home in a vacation spot.
This will help you understand why reverse mortgages have the following restrictions:
- Be 62 years of age or older
- No mortgage or a mortgage with a low balance
- Home is the primary residence
- No delinquencies on federal debt
- Attend an information counseling session with an HECM counselor
Betty, your neighbor, meets all these requirements. What happens next? Well, she can get a reverse mortgage one of three different ways: through a local or state agency, through proprietary lender products or through the government’s HECM loans, which are backed (insured) by the Federal Housing Administration.
If you qualify for a reverse mortgage, you need to remember that you won’t get all the equity in your home. Betty’s house may have $200,000 in equity, but the agency who gives her the reverse mortgage is going to calculate an amount based on how long they think Betty will live.
In most cases, reverse mortgages represent 60-80% of the home’s equity.
Once Betty is approved for her reverse mortgage, she’ll pay fees (usually higher than a normal mortgage) that are taken from her payout. Betty is free to do whatever she wants with the money. When she dies, her heirs can decide if they want to sell the house or keep it. Either way, they’re responsible for any outstanding reverse mortgage balance.
There are also cases where the loan balance is bigger than what the house is worth. In this case, the heirs can sign the home over to the bank, who forecloses on the house.
In theory, Betty wins because she gets a nice chunk of money based on the equity she worked hard to build in her home, and the bank wins because they’re guaranteed to get the balance of the loan if Betty dies.
What All Reverse Mortgage Offers
As we mentioned earlier, All Reverse Mortgage specializes in one thing: FHA-backed home equity conversion mortgages. The company’s website says these loans are insured by HUD, or the Department of Housing and Urban Development.
What does “FHA-backed” and “insured by HUD mean”? Well, the FHA part means the FHA created the program and the HUD part means you’re covered if, for some reason, All Reverse Mortgage can’t pay up or the amount of your loan plus interest exceeded the value of your home.
The reverse mortgages the company offers vary in size and fees based on the person receiving the payout. As we mentioned earlier, how much equity you get is, in part, based on an estimate of how long you’ll live.
From the business side of things, it works in All Reverse Mortgage’s favor – and the favor of any company giving reverse mortgages – to give you the least amount of equity as possible. The less they give you, the more they get when they sell your home after you pass.
Once you’re approved for your reverse mortgage, All Reverse Mortgage gives you several different ways to get your money:
- Line of credit: You can withdraw money from your equity whenever you want
- Set payments: You get a certain amount of money every month, kind of like a paycheck
- Lump sum: All the money comes to you at once
Just like a normal mortgage, you’ll pay interest on your reverse mortgage. You can choose between fixed-rate and variable-rate. For the former, you’ll pay one interest rate over the life of your loan and, for the latter, the interest rate will go up and down based on the economy.
Keep in mind that, unlike a normal mortgage where you pay down interest over the life of the loan, interest in a reverse mortgage grows over time.
“As you get money through your reverse mortgage, interest is added onto the balance you owe each month,” the Federal Trade Commission’s reverse mortgage page says. “That means the amount you owe grows as the interest on your loan adds up over time.”
The All Reverse Mortgage Application Process
To get a reverse mortgage with All Reverse, you’ll need to go through six steps:
- Talk with your financial professional and friends/family about the decision.
- Set up an appointment with a HUD counselor (click here for HUD’s counselor directory).
- Apply for an All Reverse mortgage.
- Coordinate an appraisal of your home.
- Set closing date and finalize documents.
- Receive your funds.
Understanding what you’re doing is super important, which is why two of these steps focus on talking with people close to you about the decision. As many experts have pointed out, reverse mortgages aren’t simple financial products and there’s a lot of factors you have to consider before you apply for one.
We’ll get into the specifics later in this review, but, for now, let’s talk about the fees you can expect to pay when you work with All Reverse Mortgage.
Pro tip: The paperwork process can be lengthy, so make sure you get as organized as you can once you know the documents you’ll need.
Fees Associated With a Loan From All Reverse Mortgage
A reverse mortgage is similar to a regular mortgage in that you’ll end up paying many of the same fees, also known as “closing costs”:
- Origination fee: Cost of processing paperwork. Usually no more than $6,000.
- Appraisal fee: Cost of getting an appraisal for your home. Usually $300-700.
- Other fees: Title insurance, underwriting, rate lock, etc.
According to several sources we checked during research, reverse mortgage fees tend to be higher than what you would pay for a normal mortgage.
Here’s a quick quote from the Consumer Financial Protection Bureau:
“The cost of a reverse mortgage will depend on the type of loan you choose, how much money you take out upfront, and the lender that you choose. They are usually more expensive than other home loans.”
Exactly why these fees are higher than normal mortgages may have to do with the fact that there are more moving parts in reverse mortgages: life expectancy determinations, federal insurance, the uncertainty of future home values and other factors.
Either way, once you’ve completed your application and All Reverse Mortgage tells you the terms of your loan, don’t be afraid to comb through all the fees and fine print. If you see charges that don’t make sense or weird wording that seems suspicious, ask about them.
Investopedia says many mortgage lenders have “junk fees”, which are a series of charges that are designed to make the company money and serve no real purpose.
What Other People Are Saying About All Reverse Mortgage
All Reverse Mortgage says they’ve got great reviews from their customers, so we did some research to find out if that claim was true.
The company’s Better Business Bureau page has 65 reviews, all of which are positive, and four complaints, one of the lowest complaint totals we’ve seen from a mortgage lender.
The basic gist of the reviews is that customers were happy with their rates/fees and the treatment they received from All Reverse Mortgage’s customer service agents.
The four complaints about the company can be summed up as follows:
- Too many spam emails
- Appraisal was too low
- Took too long to get an appraisal
- Application process took too long
All Reverse Mortgage responded to each of these complaints, offering lengthy explanations as to what happened.
In our opinion, the lack of complaints about All Reverse Mortgage and the effort they took to rebut complaints seems to indicate they take customer satisfaction seriously.
Is a Reverse Mortgage Right for You?
As we’ve mentioned, reverse mortgages tend to have higher fees and are based on the fact the bank will take your home once you die.
These two facts alone should make you think twice about getting a reverse mortgage, no matter what type of financial situation you are in.
In most cases, people who get this type of mortgage are looking for steady income to tide them over during their retirement years. Reverse mortgages can meet that need, but the cost may not be worth it. Interest builds up over time and can cut into your original equity payout.
Now, it’s true that your loan amount will be capped at the value of your home so your family won’t be on the hook for any interest beyond that.
But there’s a chance that you could rack up thousands of dollars in interest, all of which cuts away some of the original value of your reverse mortgage.
To get a better sense of the downside to reverse mortgages, we turned to a helpful video from Chris Hogan, a retirement and financial expert.
Basically, Chris says, before you jump onto the reverse mortgage bandwagon, take a moment to look at your financial habits. Are there areas you can cut back – eating out, vacations – you can cut back on to save money?
He also pointed out that selling your home may be the best way to get equity out of it. You won’t have to pay the level of interest and fees like you would with a reverse mortgage, and, assuming you’ve paid off the house, you’ll get nearly 100% of its equity.
Here’s the video…it’s titled, “Why Reverse Mortgages Are a Bad Idea”:
Our Conclusions About All Reverse Mortgage
As if deciding to get a reverse mortgage wasn’t hard enough, there are hundreds of lenders you can choose from and each one peddles their own advantages and perks.
All Reverse Mortgage is different from the average mortgage lender because they only offer reverse mortgages. In our opinion, that’s good because they’ll know the industry inside and out, but we also think it doesn’t guarantee they’re giving you the best mortgages.
To find out if All Reverse Mortgage is the best reverse mortgage lender for your situation, take a few minutes to talk with them over the phone. Do this for several other lenders, too.
Then, once you get a feel for their level of customer service, consider getting multiple loan pre-approvals from the lenders you like. This will help you compare each company’s closing costs and interest rates. Remember, an informed consumer is a prepared consumer.
Often, the Consumer Financial Protection Bureau (CFPB) says, it’s the interest rate that can make or break a reverse mortgage, and you won’t know if you’re getting a good deal if you don’t shop around.
“The interest rate you pay depends on what lender you choose. Choosing a loan with a lower interest rate can make a big difference,” the CFPB wrote. “Take the time to compare quotes from multiple lenders so you can compare your interest rate.”
When you’re ready to decide on which lender you want to use, take a day or two to talk with friends, family and a financial professional again to make sure a reverse mortgage is right for you.
As for All Reverse Mortgage, we can’t guarantee they’ll be the right lender for you, but, based on our research, we believe there’s a good chance you could be happy with their services and fees.