10 Simple Steps to Get Started with a Reverse Mortgage
An excellent FHA mortgage program, see how to get started with a reverse mortgage in ten simple steps. Read our common-sense overview.
The first, and most important step is education and fact finding. This is a very important step because it will dispel the many misconceptions you, your family and/or your trusted financial advisors may have about the program. It will also help you understand your options and give you the peace of mind to proceed with confidence. Cherry Creek Mortgage is highly qualified to answer any and all questions about this government-insured program. Please do not hesitate to let us know how we can be of assistance.
Once you are satisfied that a reverse mortgage could be a solution to your financial needs, we will provide you with a list of the HUD-approved reverse mortgage counselors in your area. As a safeguard, prior to proceeding with your transaction, HUD requires that you meet with a counselor for approximately one hour to once again review all the information about a reverse mortgage. You have the option for any family members you choose to accompany you to this meeting; however, the lender may not attend with you. The counselor will provide you with a Certificate of Counseling which is our permission to proceed with your reverse mortgage. If completing your counseling by phone is better for you, we will provide the information you need to make those arrangements.
When you inform us that you have received your Counseling Certificate, we will arrange for you to complete a loan application and provide copies of a small number of support documents.
Upon completion of your loan application, FHA will assign a case number to your loan; title insurance will be ordered; and an appraiser will contact you to make an appointment to view your home. If your home is a HUD code manufactured home, certain intermediate steps may be necessary.
Once the processing center has received your signed loan application with attachments, the appraisal, and title information, your loan will be sent to underwriting for review. With Cherry Creek Mortgage, your file will be processed and underwritten at one location. Unlike other reverse mortgage lenders who must send your file to another state for underwriting, your personal information will be more secure with us, and the time necessary to approve your loan for closing will be substantially reduced.
Once we satisfy all underwriting requirements, the underwriter will give us a “Clear-to-Close” notification. This is our permission to set a date and time for your closing. Prior to closing, we will once again review the options of how you would like to structure your reverse mortgage funds. Your loan will close based on your instructions.
At closing, the closing agent will review all the documents with you as you sign. You will be given a copy of all documents, and an informational booklet about the company who will service your loan. This will include information about how you receive your funds, and the statements you will receive each month. Federal regulations state that you have three banking days following the day of closing to review all your documents. If, during that three-day period, you decide for any reason that you would prefer not to complete your loan, you have the right to cancel the transaction at no cost to you.
Following the three-day rescission period, the title company will pay off any existing mortgages, disburse to you any funds that you had requested as an upfront draw on your proceeds, and record the transaction with the county. Your file will be set up with the Servicing Agent, and in the following month you will begin receiving your monthly statements. Your reverse mortgage proceeds will be available to you based on your choice of how you chose to receive the funds and subject to HUD guidelines.
Now that your loan is closed, your only obligations are:
-At least one of the borrowers must occupy the home as their primary residence.
-You must keep your property taxes current.
-You must keep current and adequate homeowner’s insurance on your home (in the case of a condominium or townhouse, keep HOA dues current).
-Perform whatever routine maintenance is necessary to keep your home in good repair so as to not lose eligibility for your homeowner’s insurance.
Subject to HUD guidelines and with some loan programs, you will have sole discretion as to how you draw your funds. All costs associated with your reverse mortgage must be disclosed to you in detail. All fees, including upfront fees and any recurring fees over the life of the reverse mortgage, will be added to the final payoff. If you should ever desire to make a partial or full repayment of this loan, you may do so without penalty.
With some Loan Programs, you will have sole discretion as to how you draw your funds. You will declare your choice just prior to closing your reverse mortgage. Should you ever need to change the way you are receiving your funds, you may request a change at any time for a very nominal fee.