[Disclaimer]
For reverse mortgage loans:
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
How Long Does It Take to Get a Reverse Mortgage?
If you’re thinking about applying for a reverse mortgage loan, you may be wondering how long the process takes. The answer is that, just like when you applied for your first mortgage, timelines can vary depending on several factors. However, it helps to understand the steps involved.
Many people who apply for a reverse mortgage choose a Home Equity Conversion Mortgage (HECM), which is a loan available to homeowners 62+ that is insured by the Federal Housing Administration (FHA), part of the Department of Housing and Urban Development (HUD). The following overview explains the general steps and timing for a HECM.
Selecting a lender
It’s a good idea to start looking at lender options early. Choose a lender who takes time to answer your questions and explain the process. If you want an FHA-insured HECM, you must work with an FHA-approved lender.
Be sure to compare the lender’s reputation, interest rates, and fees before deciding. As with any major financial decision, it’s best to speak with a qualified financial advisor who can walk you through the decision-making process.
Required counseling
By law, anyone who wishes to receive a reverse mortgage loan must complete a counseling session with a HUD-approved third-party counselor. This unique consumer protection is in place to ensure you understand the loan’s requirements and have a chance to discuss questions with an independent third party so you can make an informed financial decision. You will receive written documentation that discloses each fee.
Your lender will provide a list of approved counseling agencies. Because scheduling can take time, scheduling your session early will help avoid delays.
Application steps
Like any loan, you must fill out an application and, at minimum, provide documents that verify your date of birth, proof of income, Social Security number, homeowner’s insurance, and a mortgage statement. The lender may ask for additional information to ensure you meet the loan’s eligibility requirements. They will also run a title check on the home to ensure no federal liens are present.
How much you could be eligible to borrow depends on factors including your home’s value, the age of the youngest borrower, and current interest rates. Additional eligibility factors may apply.
The next step, the appraisal, determines your home’s value. An independent, third-party appraiser will do a walkthrough to determine your home’s value and ensure it meets the minimum property standards for a reverse mortgage. In some cases, the appraisal may take only a couple of weeks, but it could take up to two months or longer, depending on local appointment availability.
Once the initial application is complete, the loan moves into underwriting. On average, the reverse mortgage application process usually takes about 30–45 days, but it may take longer if counseling sessions or appraisals are delayed or if the underwriter requires additional documentation.
Closing and accessing your funds
If your loan is approved, the closing process is similar to a traditional mortgage. You’ll meet with a notary to sign the reverse mortgage documents and confirm the paperwork matches the terms you discussed with your loan officer, including the loan amount, fees, interest rate, and the disbursement of loan proceeds.
Once your signed closing documents are received and any final conditions are met, there is a three-business day waiting period before any funds may be disbursed. On the fourth business day, any current mortgages or property liens are paid off. If you choose, a percentage of the remaining funds can be disbursed to you at that time.
[Disclaimers]
This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.
