The Reverse Mortgage Process in 8 Simple Steps

Before moving forward with a reverse mortgage, you’ll want to do your research. This includes understanding the advantages and disadvantages of a reverse mortgage and whether one makes sense for your unique situation.

Familiarize yourself with different aspects of reverse mortgages. Start by asking questions like:

How is a reverse mortgage different than a traditional forward mortgage?
Should I receive the money as a single lump-sum payment, monthly installments, or a line of credit?
What are upfront and ongoing fees and other costs?
How long is a reverse mortgage?
Will a reverse mortgage impact my spouse?
What happens after I permanently move out of the home or pass away? Will my heirs get to keep my home?
Are there alternatives I should explore?

Finding a loan officer that understands your needs is critical to the process. A licensed Loan Officer from Guild Mortgage can answer questions you might have and review specific details that apply to your financial scenario.

Once you have reviewed your questions the Loan Officer can provide a personalized proposal that outlines how much you would be eligible for, the expected costs, and other critical elements for the reverse mortgage loan.

You can use this proposal as a tool to discuss with family or your financial planners if needed.

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The next step is to complete an initial, non-binding application, which works a lot like a traditional mortgage application. In addition to the application itself, you’ll also need documentation for:

• Date of birth (birth certificate, driver’s license, passport)
• Proof that you own the property (deed) or a recent statement for any existing mortgages
• Proof of income and financial assets
• Social Security number (Social Security or Medicare card)
• Home owner’s insurance (you just need a copy of your declarations page)

Additional documentation may be required for your reverse mortgage application. Your loan officer will provide more information about what is required.

To get a reverse mortgage, you’ll need to attend an independent, third-party counseling session approved by the US Department of Housing and Urban Development (HUD). They’ll provide guidance, offer information about reverse mortgages, and answer any questions you may have about the program.

Costs can vary, although these sessions are typically priced between $125 and $200. The session will last about 45 minutes to an hour, and you can complete it in person or over the phone.

Note: You can complete this step before or after applying for a reverse mortgage, but the lender cannot incur any costs on your behalf (e.g., order an appraisal or third-party services) until you receive a certificate of completion for counseling.

Next, an FHA-approved appraiser will visit your home and follow a specific FHA format to determine its legal value and verify that it meets HUD’s minimum property standards. The process includes inspecting every room in the home, taking pictures, and assessing the durability of doors, windows, gutters and downspouts, painting and wall coverings, kitchen cabinets, and carpeting.

At times, FHA may require a second appraisal to ensure that you are getting the proper value assessed for your home.

Once an appraisal on your home is complete, your reverse mortgage application will move to underwriting, which includes conducting a title search and obtaining title insurance. The underwriter will also examine your financial documentation, credit history, and look to clear up any issues that arise during discovery. If necessary, they may request additional documentation.

After your reverse mortgage application has been approved by underwriting, you can move on to closing.

After issuing your closing documents, you’ll meet with a notary or closing agent for the actual loan closing and signing of the final documentation. There, you can check to make sure all the costs and fees align with those found in your initial disclosure and sign the final paperwork.

This process typically takes about an hour, and you will receive copies of all documents for your records.

At closing, you’ll determine how you would like to receive your loan proceeds, and you may also be able to take out a one-time lump sum at this time. The way proceeds are disbursed may be changed at any time throughout the loan, but initial disbursement options must be selected before closing in order to setup proper wiring instructions for the Title company.

Upon closing, it’s time to fund your reverse mortgage. The funds can be dispersed after adhering to a three-day “right of rescission” period, during which time you can back out of the reverse loan for any reason. Keep in mind that if you choose to take advantage of this right, you must notify the lender of your decision in writing.

After the three-day waiting period, the lender will release your funds, and you’ll be ready to begin your life with a reverse mortgage and experience all the benefits it offers!