Reverse Mortgage Information
The 7 Step Process:
STEP 1: ASSESS FINANCIAL NEEDS AND GOALS
Arrange an appointment with a Reverse Mortgage Specialist. They will be able to discuss your eligibility, financial needs and goals, the value of your home, and other information to determine how much money you might expect from a reverse mortgage loan.
STEP 2: COMPLETE A REVERSE MORTGAGE APPLICATION
Your Reverse Mortgage Specialist will help you complete the loan application. The application legally authorizes the lender to begin the process. It is not binding and can be canceled at any point during the process. The application will specify the reverse mortgage fees, interest rates, and loan amounts. During the application process, a title search will be conducted to determine if there are any liens on your property and if these liens can be included in your reverse mortgage loan.
STEP 3: RECEIVE REVERSE MORTGAGE COUNSELING
HUD requires prospective borrowers to participate in a brief counseling session with an independent third-party reverse mortgage counselor. This is to ensure you understand how a reverse mortgage loan can impact you and your finances. The counselor will review the reverse mortgage loan products and documents with you and explain your alternative options. When the counseling session is complete, your certificate will need to be signed, dated, and forwarded to the loan processing team. The lender is not legally authorized to incur any costs on the applicant’s behalf until the applicant has submitted a signed certificate.
STEP 4: PROPERTY APPRAISAL
The appraisal includes an examination of your home’s exterior and interior condition. In comparison to other homes recently sold in the area, the appraiser’s report states the value of your home- which is a key factor in determining how much money your reverse mortgage loan can provide you. The appraiser must be FHA-approved and must follow a specific FHA format.
STEP 5: LOAN PROCESSING AND UNDERWRITING
This is when the team of processors, underwriters, and loan professionals determine whether or not your loan meets all of the guidelines and conditions. The lender will work with the applicant to clear up any issues with unpaid liens against the title, trusts, bankruptcies, etc.
STEP 6: LOAN CLOSING
Once the loan application paperwork is completed and all conditions are met, you are ready to sign final documents. The lender and applicant set a closing date and time where a notary or attorney meets with the applicant to sign the final closing documents. This is an opportunity for the applicant to review the closing documents to ensure the correct interest rate, fees, and loan amounts are the expected amounts. After you sign all final documents, the loan goes into a three-day “right of rescission” period. The applicant is able to cancel the loan with no penalty during this time. Your reverse mortgage loan funds will be disbursed after the rescission period.
STEP 7: LOAN IS FUNDED
Your funds are delivered in the disbursement option you choose: lump-sum, monthly check, line of credit, or combination of these options.