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1) First you should determine your current and future cash needs and financial condition. It is recommended that you consult a financial advisor or reverse mortgage professional to understand all the details.
Check out the following sites for more reverse mortgage information:
2) Gather all information and documentation. While you will not need most of the documentation to get an initial quote or consultation, it is good to have it ready should you decide to get a reverse mortgage. Documentation for may include:
- Home deed, most recent tax bill
- Homeowner’s/hazard insurance policy
- Your personal information, Social Security, birth certificate, contact information
- Death certificate for any deceased property owner whose name still appears on the title
- Any information about your current mortgage(if applicable)
*Tip: There is no need to send all your documentation for a quote, be wary of requests to gather too much information(like your Social Security information) for a initial quote.
3) If you decide that a reverse mortgage is right for you. You should contact a certified, HUD-approved counselor to go over the process to answer all questions and concerns that you or family members may have. This step is required by the government, if you want a federally insured Home Equity Conversion Mortgage (HECM). You can skip this step if are looking for a non-Home Equity Conversion Mortgage.
You can call HUD to get a HUD-approved counselor at Housing Counseling Clearinghouse on 1-800-569-4287. Or visit their website at : HUD Approved Agencies
For a Fannie Mae Home Keeper Mortgage, you must attend a consumer education session conducted by a nonprofit or public agency engaged in reverse mortgage counseling or a Fannie Mae counselor.
4) After you have met with a HUD-approved counselor, you will receive a HUD Counseling Certificate. Keep this certificate to give to your mortgage lender, it is required documentation to a get a Home Equity Conversion Mortgage (HECM). You can skip this step if are looking for a non-Home Equity Conversion Mortgage.
5) Search for a reverse mortgage lender. It is very important to feel comfortable with potential a lender. Please see "Due Diligence" for tips on selecting a lender.
There are a number of ways to find a potential lender:
- Talk to your financial advisor or lawyer,
- Call HUD for FHA approved lenders at Housing Counseling Clearinghouse on 1-800-569-4287 or visit their HUD-approved lender website at www.hud.gov
- Talk to you local bank
- Use this site to identify potential lenders,
- Search the Internet,
- Talk to friends and family members who have a reverse mortgage.
6) Get multiples quotes for your reverse mortgage. Potential lenders will generally give you a free analysis and no obligation quote for your reverse mortgage. They should explain all potential options, fees and provide an amount that you will receive. While the highest quote may be attractive, you should consider all the factors together. These factors include: reputation, experience, your comfort level, etc.
*Tip: Ask the buyer up front about all costs and who is responsible for paying them.
*Tip: Beware of potential buyers who ask for a fee up front. There should be no fee for a quote or analysis.
7) Once you have selected a lender, you will have to fill out an application. There can be an application fee.
*Tip: Request to see the lender's privacy policy.
8) Appraisal - The lender will order an appraisal to determine an objective market value of your home and whether any repairs will be required to meet Federal Housing Administration guidelines. Federal Housing Administration guidelines only apply to FHA HECM.
9) Inspection - Most lenders will require an inspection to evaluate your home and make sure it is structurally sound and check for any termite or dry rot damage.
10) Underwriting - Once the lender has all the required information, they will begin their underwriting process which is similar to a normal mortgage process. This should take about a week.
*Tip: Ask the lender up front about the process and time to completion. Be cautious of very short process times.
11) Approval - If the reverse mortgage is approved, you will have to sign the loan documentation and decide how you would like to receive the payments.
*Tip: It is strongly advised that you have your lawyer review the loan documentation before you sign it.
12) Closing - Once all documentation is signed and closing a complete, you will begin receiving your payments. Note: You have 3 days after closing to cancel your reverse mortgage and it must be in writing.
Congratulations! You have a reverse mortgage.
*Please note: these are general guidelines, all situations are unique and vary by state and company.
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