Reverse Mortgage Steps


1) Learn and Become Educate on Reverse Mortgages
Understanding how reverse mortgages work is very important for borrowers. Talk to friends, family or a financial adviser to understand how a reverse mortgage may help you and the impact it may have on your estate.

2) 3rd Party Counseling
When getting a reverse mortgage (HECM), HUD requires that you have completed a third-party counseling session from a HUD-approved agency. The counselor will help reinforce what you learn from step 1 and ensure that you understand the various reverse mortgage options. Counseling can be scheduled by calling a member of the National HECM Counseling Network or you may contact HUD directly.

3) Request Information from a Lender
Contact a lender to start the application process. Once you speak to a reverse mortgage lender that is licensed in your state, he or she can go over the various payment options of a reverse mortgage. You will be able to choose between a lump sum, monthly payments, a line of credit, or any combination of the previous 3 options.

4) Processing
Once the application is completed, your reverse mortgage lender will order an appraisal that will determine the amount of your reverse mortgage along with getting the process started on lien payoffs and obtaining a title report to see if there will be any issues in getting a loan.

5) Underwriting
Once the all clear has been given regarding liens, title checks and an apprasial, the bank will start the underwriting process to finalize the reverse mortgage.

6) Closing/Disbursement
After underwriting has been approved, the loan will be closed once the borrower sees the finalized figures. Keep in mind, unlike a traditional mortgage, a borrower will have 3 days to cancel the loan. After this period, the borrower will receive the disbursements based on the repayment schedule chosen.