Once you have decided that you want to proceed with a reverse mortgage, you may wonder, “What do I do next?” Here are the steps you will need to take to get a reverse mortgage.
Finding a lender
To begin the reverse mortgage process, you will need to find a lender that is a good fit for you. It is recommended that you find a direct lender who specializes in reverse mortgages. Consider doing some research by reading reviews and checking ratings with Consumer Affairs and the Better Business Bureau to learn about the lender’s reputation. These companies provide unbiased, verified reviews that can assist you in selecting a lender with positive ratings.
After deciding on a lender, it’s time to call and speak with a licensed loan advisor who has a valid license with the Nationwide Multistate Licensing System & Registry (NMLS). An active, licensed loan advisor should provide his/her NMLS ID at the start of the call. The loan advisor will do a preliminary financial assessment and discuss your financial goals to help you decide if a reverse mortgage is a good option.
You should expect the loan advisor to ask for your current income, expenses, estimated property value, and permission to view your credit report. Based on this information, the loan advisor will let you know if a reverse mortgage may be able to help meet your needs and will provide you with some options.
After reviewing your options and deciding which reverse mortgage is the best option, your loan advisor will send you an application to complete.
Reverse mortgage counseling
You are required to complete a reverse mortgage counseling session with a Department of Housing and Urban Development (HUD) approved counselor before your application can be processed.
HUD-approved counseling is a Federal Housing Administration (FHA) requirement for all reverse mortgage applicants. During the counseling session, the counselor will make sure you understand the pros and cons of a reverse mortgage and its obligations1 before getting one. The counselor goes over the requirements of the reverse mortgage and answers any questions you may have. Once completed, the counselor will send the counseling certificate to the lender.
Next, the appraisal is ordered by your lender. The FHA requires an appraisal to determine the value of the house and make sure it is safe and structurally sound. Any repairs needed to bring the home to FHA standards may need to be completed before the loan can close. If the appraiser hasn’t found any required repairs, they will send the documents with the appraised value to the lender.
Processing and Underwriting
Once the lender receives the completed application, the HUD Counseling certificate, and the appraisal they will begin processing and underwriting your loan. The Underwriter performs the final financial assessment and may request additional financial documents. Once the Underwriter provides final approval, the next step is for the borrower to sign the final loan documents.
You will be contacted to schedule the final signing with a notary present. During the closing, you will review the loan documents one more time, read the fine print, and sign all the paperwork. If you have an existing mortgage, it must be paid in full with your reverse mortgage loan proceeds before you can receive additional funds.2 Finally, once all liens are paid off, you have the option of doing whatever you want with the remaining funds.
Interested in learning if you can benefit from a reverse mortgage? Call 1 (800) 976-6211 to speak with a loan advisor.
1 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
2Your current mortgage(s) and any other existing liens against the property, must be paid off at or before closing.