How Does A Reverse Mortgage Work?

Reverse Mortgage Process

Below is the process for starting and learning about how Reverse Mortgages work. See how a Reverse Mortgage is started by following the below procedures.

1. Reverse Mortgage Awareness

Homeowner learns about the Reverse Mortgage program from a news article, Internet advertisement, word-of mouth, etc.

2. Reverse Mortgage Action

If necessary, homeowner seeks additional information and documentation by contacting ReverseHelpline.us or a Reverse Mortgage loan officer, HUD, Fannie Mae, AARP, NCOA (National Counsel of Aging), or the National Center for Home Equity Conversion.

3. Reverse Mortgage Counseling

A Reverse Helpline reverse mortgage lender will help the homeowner set up counseling with a HUD-approved counseling agency. Counseling is mandatory regardless of which Reverse Mortgage product you choose. With the exception of North Carolina and Massachusetts, counseling may be done by telephone - and typically only takes 60 to 90 minutes. The counselor provides supplemental information on Reverse Mortgages, determines whether you're eligible to get a Reverse Mortgage, and discusses other options that may be available to assist you with your daily living. The homeowner will be given a certificate to give to the lender as proof they were counseled.

4. Reverse Mortgage Application

Homeowner fills out loan application and selects payment option: fixed monthly payments, lump sum payment, line of credit, or a combination of these. Lender discloses to homeowner the estimated total cost of the loan, as required by the federal Truth in Lending Act. Lender collects money for home appraisal. Homeowner provides lender with required information, including photo ID, verification of Social Security number, copy of deed to home, information on any existing mortgage(s) on property, and counseling certificate.

5. Reverse Mortgage Processing

A Reverse Helpline Reverse Mortgage Lender orders appraisal, title work, lien payoffs, etc. An appraiser comes to your home. The appraiser assigns a value to the home and determines the physical condition of the property. If the appraiser uncovers structural defects that require repair, the homeowner must hire a contractor to complete the repairs after the Reverse Mortgage closes.

6. Underwriting

A US HUD approved underwriter will review your file to make sure the property and all else comply with US HUD guidelines.

7. Reverse Mortgage Closing

Following approval, closing (signing) of loan is scheduled. Closing papers and exact figures are prepared. Closing costs are normally financed as part of the loan.

8. Reverse Mortgage Disbursement

Homeowner has three business days after signing papers in which to cancel the loan. Upon expiration of this period, the loan funds are disbursed. Homeowner accesses the funds in the form of the payment option selected. Any existing debt on the home is paid off. A new lien is placed on the home. The homeowner may use the loan proceeds for any purpose. During the life of the loan, the loan "servicer" disburses monthly payments to the homeowner (if this option is chosen), advances line of credit funds upon request, collects any repayments on the line of credit, and sends periodic statements.

Start a Reverse Mortgage

Starting a Reverse Mortgage is an easy task. Simply call us toll free 1-877-400-4391 or fill out the Free Reverse Mortgage quote form. We will answer any questions you may have and provide you with the necessary documentation and paperwork to begin a Reverse Mortgage.


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