The Reverse Mortgage Process
We start with a 30 minute phone call. We need less than 5 minutes to get your basic information: Legal Name(s), Birthdate(s), Address + Zip Code, estimated home value, and estimated mortgage still owed. We spend the rest of our time discussing your short-term needs as well as your long-term plans. Our goal is to know which Reverse Mortgage is best for you, and to receive a proposal outlining the facts and figures. We close most Reverse Mortgages within 30-60 days.
Proposal Packet
So that you can see which Reverse Mortgage works best for you and your goals, this proposal contains three compare & contrast charts, home equity graphs, and a Revolving Line of Credit balance if you are interested in the Adjustable-Rate options. It also expands on the following steps with questionnaires, important questions to ask your counselor, and what to expect during and after the process.
Application
After you have decided which Reverse Mortgage is best for you, I can help you complete your Reverse Mortgage application with all the details about your property and financial situation.
Escrow is opened: Appraisal & Title
Next, Escrow is opened and a title search is conducted to verify there are no issues or surprises with your property that could impact your loan. Also, an appraisal is scheduled to determine the current market value of your home. This is when you will meet your Escrow team and Transaction Coordinator via email.
Third-Party Counseling
Meanwhile, you may be required to meet with a HUD-approved third-party counselor. Together, you may review your finances for budgeting, residual income requirements, and confirm that you understand the terms of your HECM. You can attend in person or over the phone. Click here for more about Counseling
Submitting to Underwriting
Your application, Counseling Certificate, and other documents are submitted to the lender’s underwriting team. They carefully review your financial information, property value, and other factors to ensure you meet their eligibility criteria.
Approved
Congratulations! Your application is approved. This means the lender confirms you meet their eligibility criteria, they are prepared to fund you, and they may have…
Additional Conditions & Questions
At this stage, you may need to provide the lender additional documentation, like updated bank statements, or address specific questions about your unique situation. Once these are satisfied, we move forward into…
Closing
You meet in-person with a notary or the closing agent to sign your final loan documents and review all the terms one last time. Bring your photo ID and your favorite pen. This step finalizes the agreement between you and the lender and confirms payout amounts to you.
Funding
This is when your funds become available: Any outstanding balance on your mortgage is paid in full, credit cards debts are paid, and your lump sum payment is sent to you either by check or direct deposit.
Support
Any questions or concerns you have during the process can be addressed with a simple phone call! We look forward to supporting you along this next step in your Happily Ever After!
“What is the Difference Between a Reverse Mortgage and a HECM?”
The Home Equity Conversion Mortgage is only available for homeowners 62+. It is FHA-insured, the borrower’s credit score is replaced with a more flexible financial assessment, has non-borrowing spouse protections, can include Manufactured Homes on private land. Meanwhile, the maximum claim amount is $1,249,125.
A Reverse Mortgage is the blanket term that includes other proprietary loans from specific Lenders. Lenders, seeing the benefits of a HECM, designed loans for homeowners who are 55+. They accommodate 600+ FICO scores, offer both fixed- and adjustable-rate options, highlight maximum loan amounts of $4m, and offer 1st and 2nd liens. Although these Reverse Mortgages have tighter requirements, the closing costs are less than a HECM and continue to provide the “non-recourse” feature, which means your heirs will never owe more than the house is worth.
“What Does HECM Stand For?”
HECM stands for Home Equity Conversion Mortgage, and is the only type of Reverse Mortgage insured by the Federal Housing Administration.
“What can I spend the Cash on?”
This is one of the most common concerns in the entire reverse mortgage FAQ. The answer is “Almost anything.” Once the previous mortgage is paid, you can use the money to pay off debts or medical expenses, home renovations, once-in-a-lifetime vacations, savings—almost anything you want! Contractually, a borrower cannot invest in an annuity or in the stock market, but everything else is viable.
“Do Both Spouses Need to be 55?”
No. The older homeowner needs to be 55, and loan proceeds are based on the younger homeowner’s age.
“Ok. But What’s the Fine Print?”
- A homeowner must be at least age 55 to be eligible for a Reverse Mortgage.
- Not everyone will qualify.
- Property Taxes and Insurance Premiums must be paid on time or the loan will be called due.
- Property must meet and maintain minimum safety standards or the loan will be called due.
- Contractually, a homeowner cannot apply Reverse Mortgage proceeds to any type of stock investment or annuity.
“Why Doesn’t Everyone Do This?”
Great question! There are a few reasons. Primarily, the Reverse Mortgage concept is a major paradigm shift from the traditional 30-year mortgage: regular mortgage payments, the occasional refinance when interest rates are low, pay off the mortgage by the time you retire; This traditional forward-mortgage model is unattainable for some homeowners now faced with early retirement or rising costs. Secondly, homeowners are so ingrained to the “monthly mortgage payment” that thinking about their future without one is… mind-blowing. Finally, some homeowners want to leave their house, fully-paid for, to their children. Often, these adult children (with children of their own) would rather know mom and dad don’t have to struggle anymore and can now live happily ever after! If you do need the house fully-paid for your heirs, and need funds now for upgrades, costs, etc. we can still collaborate about how the Reverse Mortgage balance would be paid off.