Typically, the longest part of the reverse mortgage process is making the decision to actually apply. After that, from start to finish, a reverse mortgage application typically takes about 30 to 45 days and has five major steps.
On average, a reverse mortgage applicant will begin to explore a reverse mortgage six months before completing the application. The first step is normally to go to sites such as this to research. The next step is to ask for information from a local Florida reverse mortgage specialist. The homeowner can spend up to a few months meeting with the specialist in person and looking over the good faith estimate and other loan documents.
Step 1: Application
The application legally allows the lender to begin the application process and no charges have yet incurred. An application will have all of the basic information, such as the reverse mortgage fees, interest rates and loan amounts. The application is not binding and can be canceled at any time during process.
Step 2: Counseling
The HECM Counseling Certificate is proof that the applicant has accomplished the mandatory counseling session with a HUD approved agency. The counseling can be completed before or after the initial application. Once the counseling is complete and submitted the HECM Counseling Certificate it is only then that the lender can incur costs on the applicant’s behalf.
Step 3: Appraisal
An appraisal establishes the legal value of the homeowner’s property. However, a reverse mortgage appraisal is different because it must be conducted by an FHA approved appraiser and must follow a specific FHA format. With these special specifications, if a homeowner already has an appraisal than it will most likely have to be re-appraised.
Step 4: Underwriting
By administering a title search and purchasing title insurance, a lender can confirm the applicant’s legal ownership. At this stage they will also work with the applicant to make sure there are no issues with trusts, unpaid liens against the title, bankruptcies, etc. When the lender has completed the underwriting the application’s status will then be in the “clear to close” status. This signifies that everything has been completed and a closing date can be set.
Step 5: Closing
At the closing date a notary or attorney meets with the applicant to sign the final closing documents. This is the final opportunity to review the closing documents to make sure that everything are at the expected amounts, interest rate, fees and loan amounts. When it is signed the application enters a three day “right of rescission” period. These are the three days after the closing where the applicant can cancel the application with no penalty fee. Immediately after this period the title company will issue a check to the homeowner. If the homeowner is going to use the reverse mortgage to pay off an existing mortgage, then the title company will send the payoff amount to the bank as well.