How to Apply
The process of obtaining a reverse mortgage is a bit different and, in some respects, more extensive than the traditional mortgage process you may have completed in the past. This is due to the unique nature of reverse mortgage programs, government regulations, and individual lender requirements. Essentially, the process includes the following steps:
After an initial phone introduction and preliminary consultation, a face-to-face meeting with one of our Reverse Mortgage Consultants is scheduled. We encourage homeowners to invite any family members or other individuals they want to have present. The purpose of this meeting is to: (1) identify near and long term objectives, preferences, circumstances, and resources; (2) identify all options that may be suitable in addition to a reverse mortgage; (3) review all condiserations of a reverse mortgage—outlining the benefits, costs, terms, and obligations—and to determine if a reverse mortgage may be the right choice; (4) review customized reports that illustrate the specific terms, benefits, and costs each program may provide to the homeowners, and; (5) make arrangements for the next steps, as appropriate.
All reverse mortgage programs require the borrowers to attend a consumer counseling session with a HUD approved independent reverse mortgage counselor. This can be accomplished by a face-to-face meeting with the counselor, or by a phone consultation (as the borrowers may prefer and state regulations permit).
The purpose of this counseling is to make sure the borrowers understand the reverse mortgage program and are aware of other options that may be available to them. And, to further assist borrowers evaluate if a reverse mortgage is appropriate given their needs and circumstances. The counselor will provide a Counseling Certificate to certify the counseling session has been completed. Counseling is the first step required for the HUD/FHA program. Your Reverse Mortgage Consultant will provide a list of approved local counselors and national sources for you.
Application and Documentation Needed
Your Reverse Mortgage Consultant will provide a list of the documentation you will need to provide, and schedule a time to complete the application. Generally, the initial documentation needed includes copies of the following:
- HUD Counseling certificate (original)
- Photo identification (example – driver’s license, passport, state ID)
- Proof of date of birth (example – birth certificate, driver’s license, passport)
- Proof of Social Security Number (example – Social Security or Medicare card)
- Deed to the property
- Most recent real estate tax bill
- Homeowner’s insurance policy (copy of declaration page only)
- Most recent statement for any mortgages, home equity line of credit, or other liens
- Documentation to support income and financial asset resources
- Authorization to request a credit report
A property appraisal will be ordered to determine the current market value and to identify if any repairs may be necessary. Generally, needed repair costs are provided from the proceeds of the loan and must be completed within six months after the loan closes. Your Reverse Mortgage Consultant will explain the required repair policies and procedures in detail.
Processing and Underwriting
When the loan file documentation is complete, the file is submitted to underwriting for review and approval. The underwriters may ask for additional information before issuing final approval. When all underwriting conditions are satisfied and final approval is granted, the loan is cleared to close.
Closing and Funding
The loan closing will be conducted by a local attorney that represents the lender. After the closing, the law requires the funding may not occur until the expiration of three business days following the closing date. This is called the “rescission period”. During this period, the borrowers may change their mind for any reason and cancel, or rescind the transaction. If rescission is not elected, the loan will become effective on the fourth business day, the documents will be recorded, and the loan proceeds will be distributed.