By now, you’ve done your homework. You’ve read the ultimate reverse mortgage guide, and you’ve determined that a reverse mortgage is a good idea for you and your family. Now, it’s time to get started with the reverse mortgage process itself.
For most people, the complete process can take between 30 and 45 days, but the reverse mortgage process can be done at your own speed. You can move things along faster, if you would like to, and you can move things along slower, if certain elements take longer. Generally, the more willing and dedicated that the reverse mortgage holder is to the process, the faster the process can go on.
Step 1: Reverse Mortgage Counseling
The first step is to undergo reverse mortgage counseling. This is a requirement by Housing and Urban Development (HUD), and you must be able to submit a signed Home Equity Conversion Mortgage Counseling Certificate. Counseling can be completed online, via phone, or in person. Many national and municipal groups are able to provide these counseling services at a low cost.
Step 2: Complete a Loan Application
The loan application allows the lender to begin the process of preparing your reverse mortgage from their end. With the help of your loan officer, you will be asked some basic questions about your home, tax and insurance status, and yourself. The loan application is not binding and it can be withdrawn or cancelled at any point along the way.
Step 3: Home Appraisal
Next, the lender will order a home appraisal to verify the market value of your home. The reverse mortgage appraisal will be completed by a Federal Housing Administration appraiser, and it must comply with the guidelines set out by the FHA.
Step 4: Underwriting
Underwriting primarily takes place on the lender’s end, and in this phase, the underwriter reviews all of the information and documentation that has been provided. The underwriter closely reviews everything to ensure that there are not any problems or conditions prior to the loan closing. If there are any conditions, they can be resolved, and a final closing can be set up.
Step 5: Loan Closing
The final step of the reverse mortgage process is the easiest. A notary or an attorney will meet with you to sign the closing documents. The reverse mortgage holder will have the opportunity to check over all facts and figures to ensure that everything is correct.
After the loan has been closed, the reverse mortgage holder has up to three business days where they can cancel the reverse mortgage without any penalty. This period is known as the “right of rescission”. Once the right of rescission period has passed, the title company will issue a check, wire the funds, or set up the line of credit for the reverse mortgage holder’s account. After this point, the reverse mortgage is active, and the reverse mortgage holder can start to use the proceeds from their mortgage–whether they want to do home improvements, supplement their savings, or use the proceeds however they want.