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How Reverse Mortgage Works |
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A reverse mortgage (lifetime mortgage) is available to all U.S. homeowners, age 62 or older who have equity in their home. A reverse mortgage allows you to enjoy your home equity as a lump sum or through monthly payments. Repayment of the loan is postponed until the homeowner passes away, sells the house or moves from the home.
In contrast to a traditional or forward mortgage, the borrower does not have to pay monthly loan payments and all due interest is added to the lien on the property. If the borrower chooses to receive monthly payments, the debt on the property increases each month as the payments are delivered.
The keys to qualifying for a reverse mortgage are primarily two things. The owner must be age 62 or older and have equity in the home. In order to determine available equity, it is essential to determine your home value. My Reverse Mortgage Pro is offering a free national property valuation tool. To access the tool, please select: (Home Smart Lead Page/Report Link) Our property valuation tool will give you some idea of the current market value and available equity in your property.
Credit score is not a factor in qualification for a reverse mortgage loan. However, a pending bankruptcy, may affect the approval process. Additionally, mobile homes will not qualify for a reverse mortgage.
The reverse mortgage process is as follows:
Initial Consultation – The first and most important step is to have an in depth discussion as to your level of interest in and reasons for considering a reverse mortgage loan. One of our qualified and experienced loan experts will discuss your specific needs and match the best program for you.
HUD Counseling – Phase two of the reverse mortgage loan process is thorough independent counseling from a certified, HUD-approved counselor. The goal of counseling is to verify that you have had your questions answered and that there has been no confusion.
Home Appraisal – As stated earlier, value is one of the key factors in determining your ability to obtain a reverse mortgage loan. A qualified appraiser will determine your properties current market value as well as required repairs and associated costs to those home repairs.
Inspection - In many cases an inspection is required to make sure that the home is structurally sound and that there is no extensive termite or dry rot damage.
Underwriting – Upon completion of the appraisal and inspection reports your lender will thoroughly review all details associated with your property and loan. From those details, the parameters of your loan such as interest, improvement set aside totals and payment plans will be developed.
Title and Closing – As with traditional loans, a reverse mortgage loan requires the process of working with title and closing. Fees associated with title and closing may vary depending on loan amount and property location.
Delivery of Funds – Once all phases are complete, you will receive funds in compliance with your specified reverse mortgage loan program. You can choose to receive the payment as a lump sum, as a monthly payment or as a line of credit. |
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