If you are 62 or older, you could get a reverse mortgage and eliminate your mortgage payment and gain access to tax free income, while retaining full ownership of your home.  Please review the benefits of obtaining a reverse mortgage as well as how the process works below.

THE PROCESS:

1. Awareness
   Homeowner learns about reverse mortgages from a news article, advertisement, word-of mouth, etc.
2. Upfront Education
   Homeowner contacts a reverse mortgage lender to learn more about reverse mortgages.
3. Counseling
   Homeowner seeks counseling from a local HUD approved counseling agency or a national counseling agency, such as National Foundation for Credit Counseling, Money Management International. Counseling is required for all reverse mortgages and may be conducted face-to-face or by telephone.
4. Application/Disclosure
   Homeowner fills out a loan application and  selects a payment plan, whether fixed monthly payments, lump sum payment, line of credit, or a combination of these. Lender discloses to homeowner the estimated total cost of the loan, as required by the federal Truth in Lending Act. Homeowner provides lender with required information, including verification of Social Security number, copy of deed to home, information on any existing mortgage(s), and counseling certificate.
5. Processing
   Lender orders an appraisal, which the homeowner pays for, to place a value on the home. The appraiser makes sure the physical condition of the property meets FHA guidelines. If any structural defects are found, the repairs can be completed after the reverse mortgage closes.
6. Underwriting
   After receiving all pertinent information and data, lender finalizes loan parameters with homeowner (i.e., determining payment option, frequency of loan interest rate adjustments) and submits loan package for final approval. It can take anywhere from 4-8 weeks (sometimes sooner, sometimes longer) to underwrite a loan package.
7. Closing
   If the loan package is approved, closing (signing) of loan is scheduled. Closing papers and final figures are prepared. Closing costs are normally financed as part of the loan. Lender or title company has homeowner sign loan papers.
8. Disbursement
   Homeowner has three business days after signing papers in which to cancel the loan. Upon expiration of this period, the loan funds are disbursed. Homeowner accesses the funds in the form of the payment option selected. Any existing debt on the home is paid off. A new lien is placed on the home. The homeowner may use the loan proceeds for any purpose.
9. Repayment
   Homeowner doesn’t make any monthly mortgage payments during the life of the loan. The loan is repaid when the homeowner ceases to occupy the home as a principal residence. The loan may be repaid by the homeowner or the heirs/estate, with or without a sale of the home. The repayment obligation can’t exceed the home’s value or sales price.

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