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Reverse Mortgages
5 Step Application Process
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Step # 1. - Inital Application
Step # 2. - Reverse Mortgage Counseling
The following Professionals are involved in today's Mortgage Markets :
The Reverse Mortgage Application Process generally takes about 30 to 45 days from start to finish and has 5 major steps. However, the longest part of the Application Process is the decision making process that leads up to the Application.
Table of Contents
The average Reverse Mortgage Applicant begins considering a Reverse Mortgage 6 months before completing an Application. The homeowner passively researches Reverse Mortgages using resources such as this site for several months. They next request information from a local Reverse Mortgage Specialist. The homeowner invest one to two months meeting with the specialist in person and reviewing the good faith estimate and other loan documents.
The Application legally authorizes the Reverse Mortgage Lender to begin the application process but the lender can not incur any costs on your behalf until Step # 2 - Counseling, is completed. The Application is not binding and can be canceled at any point during the process. The Application will specify the Reverse Mortgage Fees, Interest Rate and Loan Amounts.
Even though the Application has been completed, the Reverse Mortgage Lender is not legally permitted to incur any cost on the Applicant's behalf until the Applicant has submitted a signed HECM Counseling Certificate. ( See Counseling ) This is proof that the Applicant has completed the mandatory counseling session with a HUD approved counseling agency. The counseling can be completed before or after the initial Application in most states.
Step # 3. - Appraisal
The appraisal establishes the legal value of the Applicant's property. The Reverse Mortgage appraisal is a special one and it must be conducted by an FHA approved appraiser ( not all appraisers have this approval ) and it must follow a specific FHA format. This means that even if a homeowner has already had an appraisal, it will most likely have to be re-appraised.
Step # 4. - Underwriting
The Reverse Mortgage Lender will confirm the Applicant's legal ownership of the property by conducting a title search and purchasing title insurance. They will also work with the Applicant to clear up any issues with trusts, unpaid liens against the title, bankruptcies, etc. Once the lender has finished underwriting, the Application's status will be changed to " Clear to Close " status. This means that everything has been completed and the final closing date can be set.
Step # 5. - Closing
The Reverse Mortgage Lender and the Applicant set a closing date when a notary or attorney meets with the Applicant to sign the final closing documents. This is the Applicant's opportunity to review the closing documents to make sure that the Interest Rate, Fees and Loan Amounts are the expected amounts. Once signed, the Application goes into a 3 day " Right of Recission " period. This means that even though the closing has taken place, the Applicant can still cancel the Application with no penalty for 3 business days after the closing. Immediately after this waiting period, the title company will issue a check to the homeowner. If the Applicant was using the Reverse Mortgage to pay off an existing mortgage, the title company will also send the mortgage payoff amount to the bank.