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Reverse Mortgages

Reverse Mortgage Guide Step 5: How to Apply for Reverse Mortgages

    Reverse mortgages are not simple to get. There are many steps you must follow in order to receive one of the numerous reverse mortgages.  To help you understand what is required of you when you apply for reverse mortgages, we have broken down the process of getting reverse mortgages down into six simple steps.

1. Learn About Reverse Mortgages

    Before you apply for reverse mortgages, you should first read about reverse mortgages to see if they might work for you.  Understanding how reverse mortgages work will make you better prepared if you do decide to apply for one. You can also use a reverse mortgage calculator online that will help you to see how much money you could receive by getting a reverse mortgage.

2. Get Counseling
   
    When you get a standard mortgage, you don't have to do anything special before you apply. However, with reverse mortgages, it is required by law to get counseling before you apply ("Steps to Getting a Reverse Mortgage"). Therefore, before talking to a lender, you must first set up a time to talk with a counselor. You can either meet with your counselor in person or talk to them over the phone ("Steps to Getting a Reverse Mortgage"). Your counselor will discuss your financial options and help you to determine whether a reverse mortgage is right for you ("Steps to Getting a Reverse Mortgage"). After meeting with a counselor, you will receive a counseling certificate, which you will need when you apply for reverse mortgages (Whitley 110).
    When looking for a reverse mortgages counselor, it is recommended that you go to HUD approved counseling agency or a national counseling agency ("Steps to Getting a Reverse Mortgage"). Some of the national counseling agencies are offered by AARP, the National Foundation for Credit Counseling and Money Management International ("Steps to Getting a Reverse Mortgage").  Remember that lenders are not allowed to make an appointment for you to meet with a counselor and lenders cannot recommend a specific counselor (Patti 113).

3. Apply for Reverse Mortgages

    After you have gotten counseling about reverse mortgages, you will meet with your lender. During your meeting your lender will discuss your options and give you a good faith estimate of your closing costs and copies of the documents you will have to sign when your close your reverse mortgage (Whitley 106-7).  After reviewing the documents, your lender will have you sign your reverse mortgage application and disclosures, which state that your lender has told you about all aspects of your reverse mortgage (Whitley 107).
    Keep in mind that when you apply for a reverse mortgage you must have a copy of: your reverse mortgages counseling certificate; your drivers' license; your social security card; your birth certificate; your recent property tax statement; your recent homeowner's insurance bill; names, address and account numbers for any outstanding mortgages or liens against the property; the deed to your to your home; the trust agreement if your property is held in a trust; a power of attorney if you have a power of attorney; and the original death certificate for your spouse if they have passed away and their name is still on the title to the property (Whitley 110, "Steps to Getting a Reverse Mortgage").

4. Get Your House Appraised


    After applying for one of many reverse mortgages, you will have to get your home appraised. The appraisal tells your lender how much your home is worth, which is one of the things that determines how much money you will receive from your reverse mortgage (Lawson 77).  You will be responsible to pay for the appraisal and most lenders will ask for a check to cover that cost when you apply for your reverse mortgage (Whitley 107). If the appraiser finds any structural damages, you will be required repair the home after the reverse mortgage closes ("Steps to Getting a Reverse Mortgage").

5. Finalize Your Reverse Mortgage Arrangements

    Once your lender finds out how much your home is worth, they will be ready to finalize your loan terms. You are your lender will determine which type of payment you want and which type of interest rate you want ("Steps to Getting a Reverse Mortgage"). Your reverse mortgage will then be submitted for approval and you will be able to close on your reverse mortgage four to eight weeks later ("Steps to Getting a Reverse Mortgage").

6. Close on Your Reverse Mortgage

    On the day when you close on your reverse mortgage, you will calculate your interest rate and you will sign the reverse mortgage documents ("Steps to Getting a Reverse Mortgage"). If you change your mind, you will have three business days after signing the reverse mortgage papers to cancel the loan ("Steps to Getting a Reverse Mortgage"). Otherwise, you will receive your money as planned.


The rest of our Reverse Mortgage Guide:


Sources:

Lawson, Steve. Reverse Mortgage Essentials. Victoria: Trafford Publishing, 2004.

Patti, Greg. Reverse Mortgages - Cash for the Rest of Your Life! San Francisco: Senior Information Products, 2006.

"Steps to Getting a Reverse Mortgage." National Reverse Mortgage Lenders Association. http://www.reversemortgage.org/Default.aspx?tabid=236.  29 August 2006.

Whitley, R Earl. Senior Financial Guide. United States: Xlibris Corporation, 2003.