The Reverse Mortgage Process

A growing number of seniors are turning to reverse mortgages to ease their financial worries. These flexible loans are secured by the equity you have in your home, and do not have to be paid back until you move out, sell out, or pass away. There are several different ways you can choose to receive the proceeds, and they can be used in any manner you choose.

Just as a traditional mortgage has certain steps you must go through before you get the money to buy your home, the reverse mortgage has steps you must go through in order to borrow against your home equity. Here is an overview of what is involved in obtaining a reverse mortgage.

1. The Learning Process – Before trying to get a reverse mortgage, it is important to learn as much as possible about them. There is lots of information about reverse mortgages available online and in print. A mortgage professional can give you additional information and help you decide whether a reverse mortgage is something you would like to pursue further.

2. Counseling – Depending on the type of reverse mortgage you are considering, the government may require you to receive counseling before going further. If so, the counseling must be done by a HUD-approved counseling agency. The counselor will go over the features and requirements of a reverse mortgage, answer any questions you may have, and discuss alternatives to a reverse mortgage with you.

3. Application and Appraisal – After counseling, you are ready to begin the application process. You will fill out the necessary forms and pay for an appraisal of your home. At this point you will need to bring in identification, the deed to your home, information about any existing mortgages, and other items needed to process your loan.

4. Inspection – Most lenders will require an inspection to ensure that the home does not have structural damage or problems that could cause said damage. If reparable problems are found, you must have them fixed.

5. Processing – At this point, title work and lien payoffs are taken care of. The final paperwork is drawn up in preparation for the next and final step.

6. Closing – Once all final approvals are made, you are ready to close. The lender schedules a time for you to complete the final paperwork. Closing costs are usually financed into the loan, so you probably won’t owe anything at this time. Once all papers are signed and everything is in order, you receive your lump sum, access to your line of credit, or a schedule of monthly payments.

The steps involved in obtaining a reverse mortgage are similar to those involved in getting a regular mortgage. But the results are much different. Instead of incurring a new monthly payment, you get money to help you alleviate other financial burdens or make needed purchases or repairs.