If you're not already familiar, a reverse mortgage is when the lender makes payments to the homeowner instead of the homeowner paying the lender as with a traditional mortgage. You can receive money from a reverse mortgage in one lump sum, monthly payments, as a line of credit, or a combination of these options. You’re only charged interest on money received.
The homeowner doesn’t have to repay the loan as long as they live in the home, but they must have the financial resources to pay property taxes, homeowner’s insurance and, if applicable, homeowner’s association fees.
The loan is repaid when the home is vacated or the homeowner dies. Any proceeds or remaining equity beyond the amount owed can be passed along to heirs, but no debt is transferred to heirs.
If you're already familiar with a reverse mortgage, here's some information about what you should expect while it is in process.
HUD COUNSELING
Federal guidelines require mandatory counseling on implications and alternatives. We will provide you with a list of approved local counselors.
APPLICATION
Provide documents below
- Pay stubs – last 30 days
- W2s or 1099s – last 2 years
- Federal tax returns – last 2 years, all pages/schedules
- Current mortgage statement(s)
- Legible copy of photo ID and Social Security or Medicare Card
- Counseling Certificate – Must be signed and dated
- Homeowner’s insurance declaration page or bill
- Most recent social security and/or disability awards letter
- Most recent statement of any retirement/investment accounts
- Copy of full Trust and/or Power of Attorney
PROCESSING
Loan file is turned into the processing department. The processor will immediately order your appraisal and begin to process your loan file.
APPRAISAL
Appraiser contacts you to schedule appraisal. Report available 3-5 days after the appraisal is performed.
UNDERWRITING
Appraisal is reviewed and file submitted for underwriting. Approval is typically available within 3 days.
APPROVAL
Once your loan is approved, Processing will contact you to discuss any outstanding documentation (conditions).
CLEARING CONDITIONS
Once outstanding conditions are supplied to processing, the file returns to underwriting for final review. Typically takes 48 hours.
CLEAR TO CLOSE
Once underwriting reviews the conditions, they clear the loan for closing. The closing department will contact you to set up a closing date. Closing can take place any time after this point.
A FEW THINGS TO KNOW ABOUT THE MORTGAGE PROCESS
Do not make any large purchases without consulting loan officer. Spending cash or incurring new debt could negatively impact your ability to qualify for a mortgage.
- After closing, your loan may be transferred to a new servicer. You will receive a notice in the mail when this happens. It is normal and everything is okay with your account.
- We will be contacting your current mortgage company and homeowner's insurance carrier. You may receive notices in the mail – this is normal. Scan and forward these to processing.
If you ever have any questions, please feel free to reach out to us at (732) 626-9827 or use the form on our contact page to leave us a message.
