Applying doesn’t take a lot of time
your decision–making process should
A reverse mortgage application process generally takes about 30-45 days from start to finish and has five major steps. However, the longest part of the reverse mortgage loan process is the decision-making process that leads up to the application.
Sometimes, a reverse mortgage applicant begins considering a reverse mortgage several months before attending HUD required counseling and completing an application. The homeowner typically researches reverse mortgages using resources such as the Moneyhouse website, trusted advisors like family, a local banker, friends and retirement planning professionals. They next request information from a local professionally licensed reverse Mortgage Loan Originator to look at loan programs, terms and related features and benefits. Some senior homeowners may invest one to two months meeting with the professionally licensed Mortgage Loan Originator in person and reviewing key documents including the Good Faith Estimate (GFE), Loan Comparison Summary and other loan documents before deciding to proceed. Our professional licensed Mortgage Loan Originators will help you make an informed decision to proceed, regardless of the time needed to provide for your decision comfort.
At Moneyhouse, we are here for you and know that getting the answers to your questions and undertaking a reverse mortgage education process are key to making a good decision. Let our experienced professional licensed Mortgage Loan Originators assist you to make the “Right Fit” for your situation early on in your searching process.
The application legally authorizes the Lender (Moneyhouse) to begin the application process but the Lender cannot incur any loan costs on your behalf until Step 2 (counseling) is completed. The application is not binding and can be cancelled at any point during the process. The application documents will specify the reverse mortgage fees, interest rates, and loan proceeds available based upon the information provided.
Reverse Mortgage Counseling
Even though the application package has been completed, the Lender is not legally permitted to incur any loan costs on the Applicant’s behalf (such as ordering the appraisal) until the Applicant has submitted an originally signed HECM CounselingCertificate. 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 and is available on a face-to-face or telephone basis.
The appraisal establishes the legal value of the Applicant’s property. The reverse mortgage appraisal must be conducted by a HUD-approved appraiser (not all appraisers have this approval) and it must follow a specific HUD format. This means that even if a homeowner has already had an appraisal, it will most likely have to be re-appraised at this point in the process.
The Lender will confirm the applicant’s legal ownership of the property by conducting a title search and purchasing title insurance on behalf of the Borrower(s). They will also work with the Borrower(s) to clear up any issues with trusts, unpaid liens against the title, bankruptcies and other credit and legal impairments. Once the Lender has finished underwriting the processed loan application and has approved the application after all conditions are cleared, the application status will be changed to “clear to close”. This means that everything has been completed and the final closing date can be set.
The Lender and the Applicant set a closing date where a title company or escrow company closing agent (in some states an attorney will conduct the closing) meets with the Borrower(s) to sign the final closing documents. This is the Borrower(s) last opportunity to review the closing documents to make sure that the interest rate, fees, loan proceeds and terms are as expected.
Once signed, the loan closing documents are subject to a three-day “right of rescission” period (except for purchase transactions). This means that even though the closing has taken place, the Borrower(s) can still cancel the transaction with no penalty for three business days after the closing.
Immediately after this waiting period, the title or escrow company will disburse the Lender’s funds according to the final HUD-1 closing statement. If the Borrower(s) used a reverse mortgage to pay off an existing mortgage debt or liens, the title or escrow company will also send the payoff amount to satisfy each party as well all other vendors and payees per the final HUD-1 closing statement. Borrower(s) draws will be forwarded as well by the closing or escrow agent and remaining proceeds (if any) will be subject to terms of the Payment Plan chosen by the Borrower(s)