How does the Reverse Mortgage Loan Process Work?

A brief summary of the Reverse Mortgage loan process

We advise that you take the time, up front, to do your research. Read up on the Reverse Mortgage loan as much as you can. Know what it is you hope to achieve through the Reverse Mortgage. Feel comfortable with the company with whom you choose to do business. Be sure they are credible and that 07102013_Financial_Advisor_articlethey are experts in the field of Reverse Mortgages. It’s best to choose a company that is local with an advisor that you can meet face to face. Contact your local Better Business Bureau (BBB) to verify they are members and in good standing. Only work with a company that is a member of NRMLA (National Reverse Mortgage Lenders Association). Require the company to furnish you with all their credentials, including company license, advisor license, and HUD approval letter.

The following is the typical procedure for obtaining a Reverse Mortgage loan. New Castle Mortgage is always available to answer any questions you have along the way. Just call us at the office location nearest you. The entire process typically takes 3-4 weeks from the time you begin, until closing. Of course you are under no obligation to proceed quickly, and you may take as much time as you need during any step in the process.

The Reverse Mortgage loan process step-by-step

We will discuss with you (either over the phone or in person) your reverse mortgage loan options. We will provide a summary of available funds and instructions on how you may receive them. Our goal is to help you decide if a reverse mortgage is the right choice for you. If you choose, you may invite other family members or friends to attend the meeting and ask any questions they may have. It is important for everyone in the transaction to make an informed decision.

This is really an "education session" to be sure that you completely understand the Reverse Mortgage loan and your options before you apply for the loan. The counseling is done by an approved agency through HUD. The counseling can be done over the phone or in person, it's your choice. A counseling certificate will be given to you, or mailed to your home. You'll need to sign and date the certificate and we will collect it at the time of application since we need to send it along with the loan application package to the underwriter. The consumer is required to pay a fee of approximately $125 directly to the HUD counseling agency at time of counseling.

After counseling has been done, we will meet to complete the application process. We will come to your home or you may come to our office. We will thoroughly explain all forms and answer any questions you may have. Once again, you may bring a family member or anyone else who is helping you with this transaction.

We will order an appraisal on your home through an Appraisal Management Company assigned by the lender. A HUD approved appraiser will be assigned to your case. The appraiser will contact you directly to set the appointment. The appraisal fee is required to be paid prior to the appraisal being performed. The appraiser will prepare the report and send it to our processor.

At the same time the appraisal is being done, the title work is being completed by the title or escrow company. This is in preparation for the closing. The title company may call you with questions during the course of their work. Please provide any information they require as this will make for a smooth transaction. Of course, if you have questions, we are just a phone call away.

Once the appraisal, title work and any other necessary information is received by New Castle, our processor will submit the loan file to a lender for approval through the lender's  underwriter. The underwriter's job is to make sure that the loan file conforms to all applicable guidelines. Once reviewed and approved, it's time for closing.

The title representative will come to your home and conduct the closing, or you may choose to come to our office, or the title company. This is when the legal documents for the Reverse Mortgage loan are signed. The title representative will explain all forms and answer any questions you have. After the closing, there is a three day right of recession mandated by the Federal Government. What this means to you is that on the fourth business day after closing, the funds you requested will be available to you. During these three days you have the right to cancel the loan.

You will not be required to make monthly mortgage payments during the term of your loan but you will be responsible for real estate taxes, insurance and home maintenance. The Reverse Mortgage loan becomes due and payable in full once:

  1. The home is no longer being used as a primary residence,
  2. The home is sold.
  3. 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.
  4. The loan becomes due and payable if the borrower does not comply with all the obligations of the loan, such as paying property tax, and homeowner insurance and maintaining the condition of the home.

We are here to answer any questions you may have at any time throughout the life of the loan. You'll receive periodic statements about your account showing the current balance, the interest rate in effect, and the amount of funds still available to you. There will be a customer service number that you may call at any time during regular office hours..

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