Most homeowners have gone through the mortgage process at least a few times by the time they get to retirement age. For various reasons: bought a new home, lower their current mortgage rate or get cash out to consolidate other debts or pay for a big ticket like college or a big improvement to the house. But mention a reverse mortgage and most homeowner, regardless of their experience with refinances, will give you a bit of a screwball look. Well, don’t sweat it, the reverse mortgage process is relatively straightforward and you’ll have plenty of help along the way.
As with any financial decision, the first step in the reverse mortgage process is to educate yourself about the product. Congratulations, if you’re reading this you’ve already taken the first step! Make sure to seek advice from trusted friends or others who have gone through the process as well, as having gone through the reverse mortgage process, their perspective can be invaluable.
The next step is to find a trusted lender or reverse mortgage broker who can assist you with your needs. A great place to start the reverse mortgage process is the Bills.com Savings Center, as we’ve got plenty of trusted lenders who are just waiting to help. But don’t just take our word for it, do your own research and make sure you ask your lender plenty of questions. Do they have testimonials from other customers? Are they registered with the Better Business Bureau? The reverse mortgage process is highly regulated by the federal government to insure that older borrowers don’t put themselves in danger of losing their home – ask HUD and FNMA about the reverse mortgage process.
Start the reverse mortgage process by submitting an application to a trusted lender or broker. Once you’ve been approved for a program by their reverse mortgage-underwriting department, they will be able to give you the proposed terms of the loan. Be sure to review these carefully and ask plenty of questions about your payments, fees and other amounts. Always keep in mind that you aren’t committed to the loan until you sign the closing papers – and even then you have three days after the closing to cancel the loan. Remember that this is your money, your home and your personal finances, so don’t be afraid to ask what you may think are “dumb” questions.
Once you’ve been approved by underwriting and have had a chance to review the proposed loan terms, you’ll need to decide whether or not you want the loan. By this time, this should not be a difficult decision. If you’ve followed all the steps in the reverse mortgage process to this point, you should be able to move forward with confidence. If you don’t feel comfortable, then you might want to retrace your steps and figure out what is missing. Once you’ve decided to move forward, the lender will take you through the heavy lifting from there – ordering appraisals, title examinations, termite inspections, surveys, gathering personal documentation and preparing the loan papers.
Before you can move further in the process, your lender will direct you to government sponsored counseling. This is one of the most important steps in the reverse mortgage process. The counseling must be administered by an independent, certified third-party agency and they will take you through the dangers and risks potentially posed by getting a reverse mortgage. They’ll also walk through the reverse mortgage process with you and will make sure that you didn’t miss anything along the way. Remember that this counseling is mandated by the federal government and is for your protection – ask the counselors plenty of questions.
You’re almost through the reverse mortgage process! The next step is the loan closing. The title company and the lender will schedule a closing time, date and location that is suitable for you and all you need to do is show up and sign papers! Again make sure to read the papers as you sign and confirm that the actual terms of the papers you are signing are exactly what you had agreed to with the lender. If there’s a discrepancy, simply ask the lender to explain. After singing, you have a three business day period during which you can cancel the loan; this is called the rescission period.
And the last step in the reverse mortgage process – receive your funds! Once the three-day period is over, you will receive your funds, with which you can do anything you like. As discussed in other sections, some people receive a lump sum payment while others prefer to keep the reverse mortgage as an available line of credit. Either way, it is now your money. The reverse mortgage process is straightforward and you get plenty of help along the way. But as with your other personal finance decisions make sure to ask a lot of questions and learn as much as you can.
