What to Expect When Applying for a Reverse Mortgage

The process for getting a reverse mortgage doesn’t have to be complicated if you know what to expect. Here are the steps involved in finding and qualifying for a reverse mortgage.

1. Do as much research as possible before contacting a mortgage lender. AARP has excellent resources to help you learn about reverse mortgages. Use a reverse mortgage calculator to get an idea of what type of loan you might qualify for. If you have friends or family who have used reverse mortgages, ask them about their experiences and whether or not they can recommend a reputable lender.

2. Find a mortgage lender through the National Reverse Mortgage Lenders Association (NRMLA), which has listings of lenders in every state. You should always check out a reverse mortgage lender’s reputation to make sure they don’t have a long list of complaints. You can contact your state attorney general’s office or the Better Business Bureau to check out lenders.

3. You must get counseling before applying for a reverse mortgage from a HUD-approved counselor or national counseling agency such as AARP or the National Foundation for Credit Counseling. You can receive counseling over the phone or in person.

4. Apply for a mortgage loan and provide any relevant documents. Your lender should give you an estimate of the total cost of obtaining a loan as required under the Truth in Lending Act.

5. Get your home appraised. Your lender will order the appraisal to make sure it meets Federal Housing Administration guidelines. You’ll be responsible for making any necessary repairs that are required.

6. During the underwriting period your lender will finalize all details of the mortgage, including payment options. Underwriting may take a couple months.

7. Close on the loan. At the closing the interest rate for your reverse mortgage will be calculated and you’ll sign all the paperwork. The Truth in Lending Act gives you the right of rescission, or three business days after closing on your loan to cancel the deal with no questions asked.

You’ll receive the loan funds after the right of rescission period has ended. Depending upon the payment plan you chose, the money will be paid as a lump sum, installments, or with a combintion of both. Any existing debt on your home will be paid off and a lien will be placed on your house.

This entry was posted on Friday, May 1st, 2009 at 4:48 pm and is filed under Reverse Mortgage . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.