Patrick O'Neil will help you learn about the process and the procedures. You will
discuss your particular needs and goals and you will find out whether a reverse Mortgage
will satisfy those goals. You will learn about the application process and whether
a reverse mortgage is right for your situation.
STEP 2. Communicate Your Immediate Needs And Your Financial Situation.
It is important to explain in detail your financial needs and goals in order to help
you make the right decision about a reverse mortgage. The amount of detail in your
communications is essential!
STEP 3. Application, Disclosures, and Borrower's Income and Assets.
You will receive assistance on the required Reverse Mortgage Loan Application along
with required disclosures concerning loan costs, the estimated amount of money available
to you, and the various disbursement options. Borrowers can select how they want
the money to be disbursed at any time in the process both prior to or after closing
the loan. Borrowers will need to provide required documentation and information including
verified proof of social security number, unexpired state or federal issued photo
identification, homeowners insurance, and when received, a signed original copy of
the FHA counseling certificate (step 4). You will also need to provide FHA approved
proof of income sources and monthly amounts, and possibly available liquid assets
such as savings.
STEP 4. Counseling.
In order to complete the application process for a Reverse Mortgage, HUD requires
that borrowers receive counseling from a HUD approved third party financial counselor.
You will receive a list of approved counselors. The Counselor will review your current
financial situation, discuss potential alternatives, and then give detailed information
concerning a reverse mortgage and the long term outlook after taking a reverse mortgage.
The application form will have documents that the counselor can get online that help
with their counseling process. Counseling must be completed in order to proceed to
the next steps in the loan process.
STEP 5. Processing, Appraisal, and Underwriting.
In order for the mortgage company to process the loan application, the borrower's
financial situation must be reviwed, income verified to be adequate to pay taxes
and insurance, and credit history reviewed to verify the borrower makes timely credit
and property charge payments. To determine an exact value for the property, the home
must be appraised by an FHA approved appraiser. Appraisers are selected by third
party Appraisal Management Companies to insure that the appraisal is a totally independent
procedure with no influence on the value determination. In addition, a title report
is obtained, along with hazard insurance information, flood certification, and if
borrowers don't have a legal description or survey that the title company approves,
a survey must be ordered. Most properties do not require a survey. The homeowner
is responsible for the fees charged for any work done prior to closing the loan.
If any structural defects are discovered that must be repaired to meet FHA standards,
the Reverse Specialist will discuss whether a repair set-aside can be utilized, or
if doing the work prior to loan approval is required. The processor will order a
preliminary title report, payoffs for existing loans, and credit report along with
other required information. Before ordering the appraisal, the lender will determine
if the borrower meets Financial Assessment qualifications which determine if a life
expectancy set aside for taxes and insurance will be required. The reverse mortgage
specialist will cover that in detail. Once the appraisal is complete and all the
required documentation is collected, the processor will send the loan package to
underwriting. The underwriter may require additional information, and if so, will
notify the mortgage company who will in turn notify the homeowners. Underwriting
can take as little as one day or up to a week or more if there are conditions which
need to be cleared prior to loan approval. Once the loan is approved it can move
to closing. The two steps that usually take the most time in the process are waiting
on a title report and ordering and waiting for an appraisal report.
STEP 6. Closing.
Following loan approval, closing documents are ordered. These include final disclosures,
final Good Faith Estimate of loan costs, the disclosures that detail the amount of
money available and what the total loan costs will be, calculated over the projected
life of the loan. In addition, promissory notes and deeds of trust will be prepared,
along with a final title policy. Borrowers have the option of closing at a title
company office or closing in their home with an approved notary if that is more convenient.
Once all the closing documents have been signed, borrowers have 3 business days to
cancel the loan should they decide not to go through with it. If they should decide
to cancel, they will be responsible for any up front expenses incurred in the loan
process including appraisal, survey, flood certification, credit report, etc.
STEP 7. Funding.
After the three day right of recission period, the loan will fund and the proceeds
will be disbursed. If there was an existing mortgage, it will be paid off, along
with any repair fees and closing costs. The remaining funds that are available immediately,
will be either in the form of a check or will be wired directly to the borrower's
bank account (the recommended method). The funds can be partially disbursed as one
lump sum, then in one year the remaining funds can be taken in monthly payments,
as a line of credit, or as a final lump sum, or as a combination of these. If you
choose a line of credit, you also earn interest on the funds that are not immediately
STEP 8. When To Repay The Reverse Mortgage.
Reverse Mortgages are essentially a flexible Payment Optional Mortgage! As long as
borrowers live in the home, there is no repayment of the Principal and Interest required.
If however they would want to make payments on the reverse mortgage, they may do
so. If for any reason they decide to move out of the home permanently, or decide
to sell the home, the balance of the Reverse Mortgage must be paid off upon sale
or within a reasonable time after moving out. In the case of moving out, borrowers
may put the house on the market and sell it. In any case, reasonable time to either
pay off the reverse or sell the house to pay off the loan is allowed. Should borrowers
pass away, the home passes to the heirs according to the will. Heirs are also given
a reasonable time in which to either pay off the loan or sell the house to repay
the loan. At no time are borrowers or their heirs liable for the repayment of the
loan should the home be worth less than the accrued loan balance. In any event, they
would never owe more than the original appraised value should they decide to keep
the home, even if the accrued loan amount were higher. In other words, if the home
was appriased for $100,000 when the reverse mortgage was closed, and upon death the
loan balance was $125,000, the heirs would be able to keep the home by paying $100,000,
and the remaining balance would be paid by the FHA mortgage insurance.
STEP 9. Act Now.
To take advantage of the benefits offered by a reverse mortgage, or learn more, Call
Patrick Now at 512-748-4669! or email for information. The timing for a reverse mortgage
could possibly never be better than right now!
This website was not created by HUD or FHA and has not been approved by HUD or any