Gather information and contact lenders to determine if a reverse mortgage is right for you. If necessary involve others that you trust, a family member, friend or adviser.
HUD requires that you received third-party counseling from a HUD-approved agency. The counselor will ensure that you understand your reverse mortgage options. Counseling can be scheduled by calling a member of the National HECM Counseling Network or you can contact HUD directly.
Complete the application and determine how to receive payment. Options are as follows:
- Lump Sum
- Monthly Payments (your choice of loan advances for a specific period, or for as long as you live in your home)
- Line of Credit (unscheduled payments or installments, at times and in amounts of borrower’s choosing until the line of credit is exhausted)
- Any combination of the above three choices
Application is processed by your lender who also orders an appraisal, title report, lien payoffs and credit report. The appraiser will determine the value of your home and uncover any structural defects or repairs that may be required following the closing of the loan.
Upon receipt of necessary information and documentation your lender will finalize the parameters, package and submit loan for underwriting and final approval.
After loan approval a final signing is scheduled. The loan’s initial interest rate is calculated and, in most cases, closing costs are financed by the loan. You are presented with closing papers and final figures for signing.
Following closing you have three business days to cancel the loan. Once this period has passed the loan funds are disbursed and the loan has been applied to any previous debts on the property. You begin receiving payments according to your selected payment option.
There are no monthly payments to be made during the life of your loan. The reverse mortgage becomes due and payable in full once:
- the home is no longer being used as a primary residence
- it is sold, or
- the borrower passes away. Upon the death of the borrower, the loan may be repaid from the sale of the home or by refinancing the existing reverse mortgage. All remaining equity belongs to the heirs/estate.