Getting a reverse mortgage is a simple process, not much different from getting a traditional mortgage, and is easier to qualify for. Getting a reverse mortgage includes several steps. Once you’ve completed all of the steps in the reverse mortgage process, you can qualify for the loan and have the ability to enjoy the benefits of a reverse mortgage, while other retirement incomes may decline.
The Reverse Mortgage Process Includes:
- Education on a reverse mortgage
- Reverse mortgage counseling
- Application and credit approval
- Underwriting and processing
- Property inspection and appraisal
- Disbursement of money
Getting started on a reverse mortgage is simple. Fill out our quick 1-minute form to have a Mortgage Advisor contact you.
Steps of the Reverse Mortgage Process
Step 1: Education on a reverse mortgage
Before you apply for a reverse mortgage, you’ll want to do research to be sure you qualify. Do you have enough equity? Are you at least 62-years-old? Is the home your primary residence? These questions, among others, are ones you’ll need to answer before applying.
It is worthwhile to read news articles and research online to learn as much as you can about a reverse mortgage, so you’re not surprised during the process.
Step 2: Reverse mortgage counseling
Once you’ve gotten a preliminary approval, you’ll need to complete third-party counseling either in person or over the phone. All counseling is done by a HUD approved and licensed counselor. Your counselor will go over the reverse mortgage in detail to ensure you fully understand what will be taking place. Part of the counseling session will discuss what happens with the loan when it passes on to your heirs. The counselor will also discuss with you other alternatives that may be a better fit for your situation.
During your counseling session, you’ll be able to ask any questions you have. Once the session is completed, you’ll receive a Certificate of Completion, which is necessary for the loan to move forward.
The counselor will not be affiliated with your lender and therefore, will be unbiased, giving you honest and accurate information solely for your benefit. You can get a list of approved counselors from your lender or by contacting the National HECM Counseling Network.
Step 3: Application and credit approval
Once you’ve done your research and decided a reverse mortgage is for you, it is time to apply. A loan officer can help walk you through the process and it is pretty simple and straightforward. They check your credit history, run your application, and decide if you’re a fit for the program. At this point, if you’ve done your homework, everything should go through smoothly. During this step, you’ll also decide if you will be taking your payments as a line of credit, in a lump sum, as monthly payments, or in some combination of the three.
Step 4: Underwriting and processing
The underwriters will process your application, check for lien payoffs, a title report, and will go over all the paperwork and documents submitted with your application. Once all of this has been reviewed, the lender will finalize the parameters for your loan.
Step 5: Inspection and appraisal
Your lender will help you set up an inspection and appraisal for your home. This will accurately determine your home’s value and make sure your situation fits into government guidelines for a reverse mortgage.
The inspection will check for any repairs that need to be made and may order a further structural inspection should the need arise. The appraisal comes with a fee, which can be rolled into the body of the loan.
Step 6: Closing
Once the inspection has been completed and everything for the loan is approved, you will meet face-to-face to sign the final loan documentation. During the closing, you’ll be provided with documents that state all applicable fees and your interest rate.
Step 7: Disbursement of the money
Upon completing the final closing, you have a three-day right of rescission that allows you to change your mind should you decide you don’t want to move forward with the loan. During this time, you can cancel the loan by submitting a form. Once the rescission period has passed, the funds from the loan will be disbursed minus any costs which were rolled into the loan.
Step 8: Repayment
No payments are required during the life of the loan. A reverse mortgage repayment comes due when you’re no longer using the home as a primary residence, you sell the home, or the borrower passes away.
Upon the death of the borrower, the loan may be paid in full by the sale of the property by the heir or be refinanced with a traditional mortgage. All equity remaining at this time will belong to the heir.
Is a reverse mortgage right for you? Fill out our quick 1-minute form to have a Mortgage Advisor contact you.