Reverse Mortgage Program and Application Process

The application for a reverse mortgage usually takes 45 days from beginning to end for each reverse mortgage program and varies by lender. Here’s an idea of the different steps involved:

1. Counseling

A lender cannot begin processing a reverse mortgage application until the homeowner has completed counseling and submitted a signed HECM Counseling Certificate. A reverse mortgage counselor can be available by phone from national agencies or face-face and by phone with local agencies.

2. Application

The application contains disclosures of the reverse mortgage fees, interest rates, and loan proceeds. The application is not binding and the homeowner is not responsible for any expenses.

3. Appraisal

The appraisal determines the market value of the property. A reverse mortgage appraisal has higher standards than a normal appraisal. It is conducted by an FHA-approved appraiser according to guidelines that require more documentation than a typical appraisal.

4. Underwriting

The lender will conduct a title search and address with you any issues such as trusts, unpaid liens on the title, bankruptcies, etc. Once the lender has completed underwriting and the application is approved, the application status will change to “clear to close” status and a closing date will be scheduled.

5. Closing

On the closing date, a notary or attorney meets with the applicant to sign the final closing documents. The homeowner should check to make sure that the interest rates, fees, and proceeds have not changed.

After signing, the homeowner has a three day “right of recission” period when they can still cancel the reverse mortgage  application without penalty.

After this waiting period, the title company will send an overnight mail check to the homeowner.