Steps in Getting Reverse Mortgage

Getting reverse mortgage is an important decision to make. While reverse mortgage is very helpful in making sure elders live a comfortable life, it is equally important to be very cautious in availing reverse mortgage.

Some basic questions arise when someone starts thinking about reverse mortgage – How to get a reverse mortgage? what are the steps involved in the same? and many more. Some of the these questions are answered in the article.


Here is a step-by-step guide for getting a reverse mortgage:

  1. Develop awareness of your requirements: Find out why you need money? how much is needed and which all ways are available to get your finances in place?
  2. Understand reverse mortgage as an option to raise money: develop understanding of reverse mortgage. This can be through planers, websites, friends etc. You can also contact a reverse mortgage lender or the National Reverse Mortgage Lenders Association to learn more about reverse mortgages.
  3. Get counseling: Once you have developed basic understanding and are interested in exploring the option you can seek counseling from a local HUD approved counseling agency. The counseling can be face to face or through phone. By law your counselor will have to review the following :

    • options, other than a reverse mortgage, that are available to the prospective borrower, including housing, social services, health and financial alternatives
    • other home equity conversion options that are or may become available to the prospective borrower, such as property tax deferral programs
    • the financial implications of entering into a reverse mortgage
    • the tax consequences affecting the prospective borrower’s eligibility under state or federal programs and the impact on the estate or his or her heirs.
  4. Application stage: As a homeowner you fill the application along with all important disclosures. Payment plans etc. are also selected by the homeowner. Lender discloses to homeowner the estimated total cost of the loan, as required by the federal Truth in Lending Act. Homeowner also provides lender with other required information such as – verification of Social Security number, deed to home, info on any existing mortgage(s), and counseling certificate.
  5. Processing / Appraisal: Appraisal is ordered by the lender (paid by the owner). Appraiser inspects the home to ensure its in accordance with FHA guidelines. In case of any structural defects, they have to be take care by the owner.
  6. Underwriting: Based on the information from the appraisal and various other parameters, the lender's underwriting team finalizes the loan package and send for approval. Typical time for the same is 4-8 weeks.
  7. Approval and Closing: After approval of the loan, closing is scheduled. This involves calculation of interests rates, closing papers are finalized and final figures are prepared. Closing costs which are financed as part of the loan. Lender and homeowner signs the loan document.
  8. Disbursement: After signing the loan papers, homeowner has 3 days to cancel the deal. Upon expiration, money id disbursed to the homeowner.

    • Payment is given to homeowner based on payment options
    • A new linen placed at home

The loan is repaid when homeowner stops residing at the house as principal residence. Repayment obligation cannot exceed the value of the home.