1. Research and Education
Gather information and determine of a reverse mortgage is right for you. Involve others you trust, a family member, a friend, a certified financial advisor. our preference would be to include anyone you would seek advice from in the process from the beginning. That way all questions and concerns can be addressed as we learn about your needs and how a reverse mortgage might help. This step is educational to determine if a reverse mortgage is right for you!
2. Reverse Mortgage Counseling
HUD (Housing and Urban Development) requires that you receive third party counseling from a HUD approved agency to review your decision to obtain a reverse mortgage. Counseling will ensure that you understand your reverse mortgage options. The cost is generally $125 or is often free and is conducted either by phone or at a local office.
Reverse Mortgage Application
The application is prepared by your loan officer based on your choice of how you would like to receive the proceeds of your reverse mortgage. You will then be required to sign the application including disclosures. Options are – lump sum, monthly payments, line of credit or any combination of the first three choices.
Reverse Mortgage Process
Application is then processed by Signet Mortgage Corporation, who also orders an appraisal, title report, lien payoffs and credit report. The appraiser will determine the value of your home. It is important to note that this is an FHA loan and the appraiser will note repairs that may be required following the closing of the loan.
Reverse Mortgage Underwriting
Upon receipt of necessary information and documentation, your lender will finalize the parameters, package and submit loan for underwriting and final approval.
Reverse Mortgage Closing
After loan approval, a final signing is scheduled. The loan initial interest rate is calculated and in most cases, closing cost are financed by the loan. You will be presented with closing papers and final figures for signing.
Reverse Mortgage Disbursement
Following closing, it is a requirement that you are allowed three (3) days recission period to cancel the loan. Once this period has passed, the loan funds are disbursed and the loan will be applied to any previous debts on the property. You will begin receiving payment according to your selected payment option.
Paying back your Reverse Mortgage
There are NO monthly mortgage payments to be made during the life of your Reverse Mortgage loan. The Reverse Mortgage becomes DUE and payable in full once:
- the home is no longer being used as a primary residence,
- the home is sold,
- the borrower passes away. Upon the death of the borrower, the loan may be repaid from the sale of the home, or by refinancing the existing mortgage. Important to note: All remaining equity belongs to the heirs/estate.