The 10-Step Reverse Mortgage Loan Process
If you are planning to apply for a reverse mortgage, here are some steps you will need to follow.
Step 1
Research
Do your research and work with a company experienced in reverse mortgages, like Fairway Independent Mortgage Corporation. Our Reverse Mortgage Planners will review your individual financial situation to help determine which reverse mortgage product is right for you.
Step 2
Education
Every person that applies for a reverse mortgage must receive independent third-party counseling from a HUD-approved counselor. The counseling session will cover the basics of reverse mortgages and help you determine if this is the right financing option for you.
Step 3
Apply
The next step in the process is signing your reverse mortgage application and providing your Reverse Mortgage Planner with the supporting documents needed to start the file. Your Reverse Mortgage Planner will pull your credit report, have your application prepared and then meet with you to go over and answer any questions you may have. They will also supply you with a list of additional items needed to qualify your loan.
Step 4
Appraisal
After you sign the application and provide supporting documentation, the processing of the loan will get started. At this time, we will order an appraisal, title report, tax history and flood certification. The processing department will review all documentation as it comes in and prepare the file for underwriting. Your Reverse Mortgage Planner or a member of their production team will keep you informed of the status and reach out to you if they see any delays in your loan.
Step 5
Underwriting
Once processing receives all the required documentation on your file, it will be sent to an underwriter, who will issue a loan decision. We will communicate if any conditional items are needed for loan approval at this time.
Step 6
Choose Your Payout Option
When the underwriter has approved the loan for closing, you and your Reverse Mortgage Planner will need to determine how you would like your loan proceeds dispersed based on these options:
- Lump sum payment
- Monthly cash flow payments
- Line of credit
- Combination of the above options
Step 7
Making It Official
An appointment time and date will then be set for you to meet with the title company and sign your closing docs.
Step 8
Receive Your Payment and Enjoy It!
Three business days after closing, your loan will fund based on the payment plan you selected.
Step 9
Going Forward, Take Care of the Basics
Your reverse mortgage will not have any required monthly payments, though you must still pay taxes and insurance and maintain the home.
Step 10
Settling the Loan
The reverse mortgage will only become due for the following reasons:
- The home is no longer your primary residence
- The home has sold
- The borrower passes away
If death does occur, the loan can be repaid from the sale of the home or refinancing the existing reverse mortgage. Equity in the home will belong to the heirs or the estate. The heirs need to contact the servicer after the passing to make arrangements with the servicer on settling the reverse mortgage.
