You know everything there is to know about reverse mortgages and have decided that this is the best loan option for you.
The next question is what steps should be taken to initiate the loan. Many elderly homeowners eventually decide they need a loan, but they have no idea how to apply for one or how long the process will take.
While this oversimplification may not account for all the variables, it does cover the basics of what a borrower must do to secure a reverse mortgage..
Find a lender
Find a reverse mortgage lender who knows what they’re doing. Selecting a competent loan originator is the first step. You shouldn’t be shy about contacting many businesses for quotes.
If your lender is a part of the NRMLA, you know they share your commitment to the association’s strict guidelines. The real proof is in the capacity to originate as well as close loans, and who better to attest to that ability as well as how the company performs for you and your needs than those people who have done so in the past and can attest to how well the company will perform for them.
Counseling
Without a signed Certificate from all borrowers as well as the Counselor, the loan cannot proceed and no borrower can begin processing the file. Many borrowers opt to get counseling by phone, although in-person sessions and translation services are also available.
It’s true that you can get your counseling first and then pick a lender, but a good reverse mortgage expert will help you get ready for it, provide you with a list of advisors from which to choose, and narrow down your program options before you even meet with the counselor.
While some borrowers prefer to have the certificate in hand before approaching lenders, a growing number of borrowers are opting to attend counseling only after they have selected a lender and program, researched their options, and are confident in their decision to move forward.
The application method
If you’re interested in a reverse mortgage, fill out the application and send it back to the lender along with your counseling certification.
Now that you’ve received counseling and decided on a loan originator, all that’s left to do is fill out and submit the loan application.
Borrowers frequently inquire, “How soon can you finalize our loan?” Usually, experts provide a deadline for them to submit their application packet and counseling certificate to me signed.
The lender will start the loan process by ordering title work, an appraisal of the property, and a credit report.
The processing time of a reverse mortgage loan may be affected by a few factors. Condominium developments that need underwriter clearance, liens on title that borrowers are unaware of that must be erased; valuation problems in rural regions are all potential causes of loan delay.
The underwriter will provide their stamp of approval once they have reviewed all the paperwork for your loan. Find out more here.
End of loan
After the underwriter has reviewed your reverse mortgage loan as well as determined that it satisfies all guidelines, they will transfer the file to the closing department to issue the loan applications and the original source will communicate directly with you or the person responsible to gather any remaining items (called “conditions”).
A loan originator will contact you to schedule a time when a signer can come to your home. Unless there are validly changed circumstances, the costs and fees disclosed to you in the preliminary disclosures should be the same in all final documents and disclosures.
If you are not using the reverse mortgage to buy a home, the lender must offer you three business days to alter your mind after signing the loan documents.
The three-day cooling-off period begins on the day you receive your paperwork and ends on the third day after that, excluding weekends and holidays. During this time frame, you have the option to back out of the deal without paying any penalties.
Loan disbursement/funding
In many ways, this is the simplest part of the reverse mortgage process for the debtor. The settlement agency, usually a title business, receives a wire from the lender.
Lenders’ Deeds and Mortgages are recorded with the county recorder’s office in the county where the property is located after a final check by the title company to make sure no new liens have been filed against the property since the last title search.
The title company may not learn that the recording occurred as requested until late in the afternoon, based on the jurisdiction. If the borrower requests a wire transfer instead of a check, the settlement agent might or might not be able to get the funds to the lender on the same day the loan records, depending on whether or not the wire transfer makes it through the Federal Reserve System by the cut-off time.
