Reverse Mortgage Steps - Starting the Process

You have lived in your home, many of you for over 25 years. You mow the grass, you fix up the house, but perhaps you're thinking of letting your home work for you. Isn't it about time your home paid you back? Tapping into tax-free equity from your home's retirement "bank" is easier than you think.  

You may have discussed the reverse mortgage with family and trusted advisors and are now ready to begin the process. You are joining the hundreds of thousands of senior homeowners who chose to access the equity wealth in their homes for their benefit and for their use.

Contact a Reverse Mortgage Specialist: Begin by contacting a Reverse Mortgage Specialist. You will receive a free, no obligation consultation so you can examine the Reverse Mortgage figures and parameters. Your Reverse Mortgage Specialist will discuss all your options and determine if a Reverse Mortgage is right for you. You may want to invite a friend, family member, or financial advisor to the consultation in order to ask questions and get information.

Independent Reverse Mortgage Counseling: Reverse Mortgage counseling with a HUD-approved counseling agency must be completed prior to getting an appraisal of your property. Reverse mortgage counseling is required by the Federal Government as a safeguard for borrowers. It is there for your protection and ensures that you understand the parameters of the reverse mortgage and the step you are taking.  NOTE: There is nothing to preclude signing an application prior to Reverse Mortgage counseling. 

Counseling Certificate: After your HECM counseling session, you will receive a HECM counseling certificate. If counseling is done over the phone, the certificate can be faxed or emailed to you to expedite the process. (An original will be mailed to you).  Contact your Reverse Mortgage Specialist to advise them you have completed reverse mortgage counseling and received your certificate. You will sign the certificate that your counselor has already signed and provide your mortgage specialist with the certificate. Some lenders require wet signatures and some will accept a copy of the signed form.

The Reverse Mortgage application:  You will decide how you wish to receive your funds based on your proposal.  Your Reverse Mortgage Specialist will walk you through the reverse mortgage application & signing process.

Documents required:  Verification of social security number, date of birth, and proof of identity is required. Income documentation is also required such as Social Security benefit letter, SS 1099 from previous year, pension or employment info.  Copy of your current mortgage statement, a recent bank statement, property tax and homeowner's info as well as  HOA dues information is also required.  If you live in Florida, you will be required to provide your survey. 

Appraisal & Title Search: An appraisal of your home will be performed to determine its value. With a reverse mortgage, a full appraisal is required which means an interior and exterior inspection will be conducted.  The appraiser will compare your home to homes in your area that are similar to yours.  A title search will also be conducted.

Submission of Your Loan to Underwriting: After the appraisal and title are completed, your application can be submitted to Underwriting at the lender. Once the Underwriter determines that the home meets the requirements  of the lender and FHA, a conditional approval is issued.  

Conditions Required by the Lender: There is one more step before your loan is cleared to close: conditions required by the lender. There are various conditions that the underwriter may require.  Your Reverse Mortgage Specialist will work with the underwriter to complete all the conditions.  Further documentation may be requested.

Clear to Close: Your Reverse Mortgage Specialist will inform you when your loan is clear to close. This means all conditions have been satisfied, all the necessary documentation has been deemed acceptable, and your loan can close.  

Closing:  The settlement agent, an attorney for the lender or the title company, will close your loan. The title closer is responsible for paying your taxes and insurance. Different states do things differently. Closings generally take about one hour or more. In New York state, you must also have your own attorney.

Right of Rescission: You have three days in which to reconsider and cancel the reverse mortgage transaction. This is known as the the "right of rescission" period. Saturdays are included. Sundays are excluded. 

Funding:  Once the right of rescission period has passed, your loan can fund, and you will receive your funds either by direct deposit into your checking/savings account or by check which can be overnighted to you.  CONGRATULATIONS!