The Steps to a Reverse Mortgage
Once you have made the decision to pursue a reverse mortgage and are ready to make the first move then you will find these steps helpful. The steps are very similar to obtaining a regular home mortgage. You went through the process when you bought your home so you should be familiar with many of the requirements to get a reverse mortgage loan.
A – Do Your Homework – before you take your first step, familiarize yourself with literature and online research using sites such as this to decipher the terminology and the current reverse mortgage details. As with regular mortgages, interest rates and requirements can change at any time so be sure to follow the current interest rates in the financial news or posted in the paper.
B – Make the Initial Contact – Find a reverse mortgage counselor from a local HUD approved agency or a National counseling agency. The counselor will discuss your options. They are obligated to be neutral. They will not try to persuade you or influence you. They are there to educate you and offer you available options. It’s a mandatory step and is in place to protect you. You will receive a document certifying that you have received and understand the fundamentals of a reverse mortgage. It can be handled in person or over the phone. This counseling appointment may cost you about $125.00. AARP is an example of a National Counseling Agency.
C – Loan Application/Disclosure – By using a formula based on the interest rate and your age, the lender will be able to calculate the amount you are eligible for. With this step the application is completed and a payment plan/payout option is chosen by you.
D – Loan Processing – The lender that you are working with will order an appraisal to determine your home’s worth.
E – Underwriting – The lender finalizes the loan details with the homeowner and submits the loan package for approval. This process commonly takes 4-8 weeks.
F – Closing – very much like the closing when your home was purchases. Your lender will charge for basic mortgage loan expenses such as home appraisal, county and state recordings, pest inspection, title insurance, FHA mortgage insurance protection, and title insurance. These closing costs are quite often factored into the loan amount.
G – Disbursement of the funds are handled 3 days after the closing. It is your choise when it comes to payment options.