The process and steps of receiving a reverse mortgage typically happens in five stages. The process is just like taking out a traditional mortgage, but with one extra step involved. Most consumers think that a reverse mortgage is more complicated than it actually is, but in reality it is an easy endeavor.Step One – Speak With a Reverse Mortgage Counselor
The Department of Housing and Urban Development (HUD) requires that all potential reverse mortgage borrowers receive counseling about the program and everything it entails. This is the extra step in the process of receiving a reverse mortgage, every other step is much the same as taking out a traditional mortgage. After speaking with a reverse mortgage counselor, you will receive a certificate of completion that you must present to your lender in order to move forward with the process. The counseling session usually last about an hour depending on how many questions you may have and the certificate is good for 180 days from the session.
Step Two – Application
Once you speak with your lender, they will fill out an application for you and ask you to send in any required paperwork that needs to be sent to the underwriting department to approve the loan. At this point, you will determine what type of payout you would like to receive:
- Lump Sum – Receive all of your money at once
- Line of Credit – Allows you to draw on the equity of your home when you need it
- Tenure Payout – Fixed monthly payment for the rest of the time in your home
- Term Payout – You determine how long the monthly payment will last
or you can choose a combination of any of the above. The reverse mortgage program is very flexible and at any point during the payout period of your loan, you can choose to change the payout option, as long as you did not choose the fixed lump sum payout in the beginning.
Step Three – Appraisal
After you have received your counseling session and spoke with your lender, the next step is to get the appraisal. Most appraisals cost anywhere from $400 – $500 because the appraiser must be FHA-approved. But don’t worry, your lender will find an appraiser for you.
Step Four – Underwriting
Once the appraisal comes in, the loan moves to the underwriting department. At this point they will review all paperwork and the appraisal. If the underwriter needs any additional paperwork they will notify the loan officer you are working with to get that from you. Once all documents are finalized the loan moves to closing and disbursement.
Step Five – Closing and Disbursement
Once the loan is ready to close your lender will contact you to set up a time to sign the final paperwork. Typically, you can choose the place to sign, it can be at your home, work or anywhere you feel most comfortable.
After the signing, you have a three day right of rescission, which means that if you want to cancel the loan you may do so within this window of time. On the fourth day, your loan gets disbursed and funded!
At this point, whatever payout you chose during the application process will begin to proceed.
It is an easy process and exactly like taking out a traditional loan except for the first step, when talking with a reverse mortgage counselor.
Please fill out the contact form at the right or by clicking here and have a qualified representative contact you!
The Process and Steps of Receiving a Reverse Mortgage
![The Process and Steps of Receiving a Reverse Mortgage]()
Reviewed by Merlyn Rosell
Published :
Rating : 4.5
Published :
Rating : 4.5