Reverse Mortgage Information
What Is A Reverse Mortgage?
A reverse mortgage is a financial product that is available to homeowners who are at least 62 years of age. The most common and the safest form of this product is the Home Equity Conversion Mortgage, or HECM. This reverse mortgage is regulated and insured by the federal government. This type of loan has regulated fees and a non-recouse feature that protects you from owing more than your home is worth. This financial product works by converting the equity in your home into usable funds which eliminates your monthly mortgage payment for as long as you live in the home.
Consultation & Counseling
1One of the first things to do when interested in a reverse mortgage is obtain information from a specialist. The specialist will help you understand how a reverse mortgage works, what your responsibilities are, and how it could affect any benefits you currently receive. After speaking with a specialist, you will be required to attend counseling with a HUD-approved counselor. This counselor must be a non-commissioned third party to make certain that you receive the most accurate and pertinent information. The counselor will go over the whole process and answer any questions you might have. After determining that you understood the session, the counselor and you will certify your session by signing a counseling certificate.
Application & Appraisal
2After receiving your counseling certificate, your reverse mortgage specialist is free to take your application. After getting some personal details from you, the specialist will send out preliminary paperwork that explains the current terms of the loan. Many of these documents will require your signature, but nothing is binding until you close on your loan. After counseling, the appraisal can also be done. An appraisal is performed on the home in order to assess the value of your home which will be used, along with your age, and the interest rate of the loan in order to determine the amount of money you could receive.
Underwriting & Closing
3After receiving both your appraisal and the paperwork back from you, the specialist will compile the paperwork necessary to submit your loan to the underwriter. The underwriter will then look at your paperwork and your situation and issue either complete approval, conditional approval, or a denial. Once the loan is completely approved, you will be able to set up a time to close on your loan. At the closing, you will sign the binding paperwork in front of a notary confirming the terms of the reverse mortgage. After closing, there will be a three day right of rescission, then the loan will fund.