If you are curious about what you need to do to get a reverse mortgage, this simple step by step explanation will make the process clear.
5 Steps To Getting A Reverse Mortgage
Selecting a Reverse Mortgage Lender
You should begin your search for a reverse mortgage lender using the free and easy online tools available. You want to find a reverse mortgage lender who will return your emails or phone calls promptly. Select someone who has experience with reverse mortgages because they are complicated lending instruments. The National Reverse Mortgage Lenders Association (NRMLA) publishes a code of conduct that an ethical lender should use. Ask the lenders you speak with if they are members of the NRMLA or follow a similar code of ethics.
Most reverse mortgage loans are HECMs. HECM eligibility requires counseling by a HUD-approved and trained counselor. The reverse mortgage loan counselor goes over all the details of a potential reverse mortgage and makes sure you understand the consequences. You are also required to consider the alternatives to a reverse mortgage that might be available. To find a HUD counselor, go to the HUD Website and search for a reverse mortgage loan counselor in your area.
Make a Reverse Mortgage Loan Application
You've found a reverse mortgage lender and you have spoken to a reverse mortgage loan counselor. Now you should be ready to complete a loan application package. It is typical to sign a number of disclosures along with your application. One such disclosure will be titled the Total Annual Loan Cost (TALC). This disclosure allows you to compare the different disbursement options available as well as interest rate choices. Consider which disbursement option meets your needs and get the best interest rate you can.
Processing and Underwriting Reverse Mortgages
Reverse mortgage are complicated lending tools. It takes time to process and underwrite the files. During the processing an appraisal is done on your home. The amount of money you can borrow is determined by the value of the home, the available interest rate, and the age of the youngest borrower. Allow time for this process to be completed and stay flexible because the reverse mortgage lender may come back to you more than once to request information or documentation.
Close Your Reverse Mortgage and Begin Disbursement
After your file has been approved, the reverse mortgage lender will move it over for loan documents to be drawn. You sign the required paperwork. Those legal documents go back to the reverse mortgage lender's funding department. Once the loan has funded, disbursement begins according to the plan you selected.
Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.