What Is Reverse Mortgage | How to Apply for a Reverse Mortgage

How to Apply for a Reverse Mortgage

There are many steps necessary to apply for a reverse mortgage. These steps have been outlined by federal legislation, and no step can be skipped. It is important to work with a knowledgeable lender and credit counselor that can provide you with all of the information you need about applying for a reverse mortgage. These individuals will also be able to walk you through the process easily.

The first step in applying for a reverse mortgage is to gather information. Information about reverse mortgages can be found through many non profit organizations and associations. Once you have gathered information and are ready to seriously consider the reverse mortgage as a financial solution, you will need to obtain credit counseling. This counseling must be provided by a federally approved vendor, such as AARP.

During the reverse mortgage counseling, you will discover and review all of your options for solutions of your financial problems. You will also learn more information about how receiving the reverse mortgage will affect your government benefits, your taxes, and your estate and heirs. When you have completed the reverse mortgage counseling and are still ready to get a reverse mortgage, it is time to actually submit your application.

During this third step in applying for a reverse mortgage, the counselor will put you in touch with a qualified lender who will underwrite your loan package. This fourth step can be a somewhat lengthy process, taking up to two months. It is during this time that you will determine how you want to receive your loan payments. You can choose from several options including a lump sum, a line of credit, or monthly installments.

Closing of the loan includes the establishment of interest rates and closing costs. This fifth step in applying for a reverse mortgage will also include signing of the papers. Closing costs are typically financed as a part of the loan. At this point, your application process is complete, and you have obtained your reverse mortgage. Repayment of the mortgage does not occur until you no longer use or need the home.