The Application Process
Step 1) Proposal - This is where I get an idea of your goals. Answer any questions that you may have concerning just about anything regarding the Reverse Mortgage or the process of getting a Reverse Mortgage. I am going to ask you questions. What is your home value? How much do you owe? Credit, income. Enough so that I get an accurate idea of your financial scenario and goals. Everyone’s situation is different. I take the time to get an accurate idea of what I can do to help you. There is no signing, no gathering of paperwork, no money that will be asked for, or any obligation of any kind. Then a proposal is generated with all the exact numbers that will be the nuts and bolts of the loan. All fees will be disclosed. Cash out will be calculated. Interest rates are disclosed too. Needed paperwork will generally be discussed during this period, but not collected.
Step 2) Counseling - All Reverse Mortgage clients must complete a Reverse Mortgage Counseling course prior to any applications being taken. This is to be completed by an independent third party and is used an additional opportunity for the customer to ask any additional questions and is used as a check and balance system to make sure the loan officer is informing the client of everything they need to know concerning a Reverse Mortgage. There is a 7 day “cool down period” that is needed prior to any event that may incur the borrower any money after the counseling period. The counseling certificate is good for 6 months.
Step 3) Application - this is where the information that is gathered during the proposal period is used to generate an application that is needed. Signatures and additional income documentation will be needed to completed this process.
Step 4) Appraisal - There will need to be an appraisal completed on the property. This is what is needed to establish the value of the property. This is an FHA Appraisal to be completed by a FHA approved appraiser and is good for a period of 4-6 months.
Step 5) Underwriting - Once the appraisal is completed, the loan is ready to be submitted to the underwriter. The Underwriter reviews all of the documentation and identifies conditions to be satisfied prior to closing related to any additional or missing items. Once the conditions have been completed, the final closing date can be set.
Step 6) Closing - Once the loan documents are generated, a mobile notary comes to the borrower anywhere they want. Generally, this is done in the comfort of the home. Once the closing documents are signed, there is a three-day federally requited ”right of rescission” period. This means that even though the closing has taken place, the applicant can still cancel the loan with no penalty for three business days after the closing. With a Reverse Mortgage to Purchase, there is no right of rescission.
Step 7) Funding and Recording - After the Rescission period, the loan will fund and the title company records the new loan with the county. Generally, this is done in the same day, however there are certain counties that don’t allow for same day funding’s and recordings. Upon recording the title company either mails or wires any cash monies the borrower is entitled to .
This whole Reverse Mortgage process takes about 30 to 45 days.