Breaking Down the Reverse Mortgage Application Process: 6 Easy Steps
Financial decisions should never be made in haste — especially when it comes to major commitments like a reverse mortgage loan. It’s important to work with a lender you trust, and one that can provide you with a variety of reverse mortgage options.
At Reverse Mortgage Funding LLC (RMF), our reverse mortgage specialists will support you throughout the entire loan process, answering any questions you may have. Be sure to call us at (888) 277-1567 when you’re ready to get started.
The path to financial peace of mind
From beginning to end, obtaining a reverse mortgage generally takes about 30-45 days. Here’s what you may expect at each step:
- Education. A loan specialist will provide you with the reverse mortgage options that may fit your needs. He or she will explain the terms, benefits and costs of each product and borrower responsibilities through the life of the loan.
- Counseling. Are you a good candidate for a reverse mortgage? Reverse mortgage counseling is required for all prospective borrowers. Because reverse mortgages are only available to older Americans and involve what is often their biggest asset, counseling helps make sure borrowers understand all aspects of their loan. Lenders are required to provide a list of independent, HUD approved Reverse Mortgage counselors to all borrowers. Counseling sessions generally last around 90 minutes. Counselors will discuss the application process, the borrower’s responsibilities and obligations, and the lender’s responsibilities. Counselors will also make sure the borrower knows about other financial options that may better fit their needs. Close friends or family members are encouraged to attend the session with the borrower, to ask their own questions and to better understand the process. When the counseling session is over, both the counselor and the borrower will sign a counseling certificate confirming the counseling requirement has been fulfilled.
- Application. Before completing an application, the borrower must select a lender. Borrowers will generally work with the same loan specialist throughout their application. They will be required to provide some personal information and will be asked to choose how they want to receive their funds. Options include fixed monthly installments, a lump sum, a line of credit, or a combination of these options. (Borrowers who elect a fixed-rate loan will receive a single disbursement lump-sum payment. Other payment options are available only for adjustable rate mortgages. In certain states, RMF’s Equity Elite® loan provides a fixed-rate term payment option.) Lenders will also analyze the borrower’s financial situation to make sure they’ll be able to afford to pay ongoing home expenses like property taxes and insurance and home maintenance costs. All income sources will be considered. Should the lender decide that an eligible borrower might not be able to afford future expenses, they will set aside a percentage of the borrower’s loan funds to pay for those expenses.
- Loan process and underwriting. A home appraisal is required to process the loan. The appraisal will be reviewed and approved by the loan underwriter. The loan underwriter also reviews all information provided by the homeowner and the lender. They will make sure that the loan complies with guidelines before granting conditional approval of the loan.
- Closing. After the loan application has been approved, the borrower will sign the closing documents with a title agent or attorney, depending on their state’s regulations. It will take a few days to schedule a closing date and make sure all involved parties receive the necessary documents.
- Disbursement and funding. The borrower has three days after signing the closing paperwork to change their mind, known as the Right of Rescission period. After this, the loan funds will be disbursed. Any existing mortgage will be paid off and a new lien is placed on the home. The HECM for Purchase and Equity Elite® for purchase options do not include a Right of Rescission period, unless a borrower adds additional funds to the purchase, in which case, the added funds are subject to recission.
The funds from the reverse mortgage can be used in any way the borrower chooses. Borrowers can change how they receive their remaining funds any time they’d like by filling out a new Payment Plan Agreement from their servicer and paying a modest fee. The new payment plan will go into effect on the first business day of the following month.
Ready to learn more?
Use our reverse mortgage calculator for a free custom quote on a reverse mortgage loan. It just takes a few minutes to see if you qualify.
Content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.5-star / Excellent score on Trustpilot; 4.5 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.