Reverse Mortgage Process
Education: It’s important to understand what a reverse mortgage is, if you qualify for one and if it’s the right product for you. Visit our “About Reverse Mortgages” page to understand what HECM Reverse Mortgages are in more detail or call us toll free to speak to one of our reverse mortgage professionals. We will provide a free consultation, help you determine if a reverse mortgage is the right product for you to satisfy your financial needs and help answer any questions you may have.
Counseling: You will be required to complete quick independent 3rd party counseling session with an FHA-approved counselor. This may be done over the phone or in person and ensures you have all the information you need in understanding a reverse mortgage and your options. They will also be able to help you decide if a reverse mortgage is right for you. This requirement by HUD was implemented to protect you as the borrower.
Application & Fees Disclosures: One of our licensed loan officers will gather your personal information for the application to be submitted and also help you determine the best payment plan for your needs. You will also undergo a “financial assessment” which helps lenders ensure you have financial capabilities to continuing to pay the home property taxes, homeowners insurance, maintain the property and any HOA dues if applicable. You will also be provided with full fees disclosure regulated by HUD.
Processing & Loan Approval: An appraisal will be completed to determine the market value of your home. However, the Loan Underwriter employed by the lender must conduct a final review and approval which could take up to 5 business days. A home inspection will also be completed to help determine any required repairs.
Closing: Upon approval of the loan application, a closing of the reverse mortgage is scheduled with an attorney or title agent. The closing costs may be financed as part of the loan or paid off by the borrower. It normally takes a few days to schedule a closing date, confirm the fees and payoffs, prepare the documents and communicate to all parties involved.
Disbursement: You will have 3 business days after signing the papers to cancel the loan. The loan will be disbursed after these three business days. Any existing debt or mortgage on the home will be paid off if any. And you will be receiving the funds in the form of payment option you choose and may change the payment plan at any time.
Life Of Loan: A loan “Servicer” who manages your account will be responsible for disbursing monthly payments to the homeowner (if this option was chosen), advancing money from the line of credit upon request, sending periodic statements and collecting any voluntary repayments. You will be required to continue paying your property taxes, homeowners insurance and maintain the property. Any Homeowners association (HOA) dues will need to be paid for the life of the loan. When the older borrower dies, the younger spouse may continue to live in the home (with no loan payments) as long as they comply with the loan terms. This protection came into effect on April 25th, 2014 when the FHA revised the HECM age eligibility requirements to extend protections to spouses younger than 62 years old.
Settling the Loan Account: If the last surviving borrower sells the home, passes away, or does not maintain the property as a principal residence for a period greater than 12 months due to physical or mental illness, the loan will be called a “maturity event” The servicer will mail a “Due & Payable” notice within 30 days to the borrower’s heirs with the loan repayment amount and options for payment. The heirs may sell the property or purchase the property for 95% of the current appraised value. The equity left in the home will belong to the heirs. In the unlikely event of a severe real estate crash, or the younger borrower outliving the loan it may be possible for the loan amount to be higher than the value of the home. If this happens the difference will be covered by FHA insurance and the heirs will not be liable for any debt on the reverse mortgage.