How to get a reverse mortgage

A reverse mortgage works like a traditional mortgage loan, only instead of you paying the lender, the lender pays you — out of your home equity.

reverse mortgage Available only to senior homeowners, and for those who want them, they can be smart Supplementing their social security payments Or want to avoid expensive monthly housing payments when income is limited. If you think a reverse mortgage might be right for you, start exploring your options here

How to get a reverse mortgage

you Consider a reverse mortgage For your retirement needs? Here’s how to go about getting one.

Decide what you will use it for

before you can Get a reverse mortgage, you must first determine what you will use the loan for. Will it be for recurring household expenses? To pay off a single loan? Perhaps a hybrid of both?

Once you know your objective, you can determine what type of reverse mortgage you need. You can usually choose between reverse mortgages that offer:

• A line of credit from which you can withdraw money as needed
• Consistent monthly payments – either for a fixed period of time or as long as you live in the home
• A combination of both, along with regular monthly payments must be drawn from the line of credit

You should also determine the total amount you need, as this also affects the type of loan you choose. Home equity conversion mortgages (HECMs) — the government-backed reverse mortgage option — come with a limit of $1,089,300. If you expect to borrow more than that, you should consider a private reverse mortgage program.

Shop around for lenders

Not all lenders offer the same rates, terms or fees, so it’s important to compare at least a few options if you want the best deal on your reverse mortgage.

When deciding who to work with, be sure to consider reputation. Check online reviews, and always check the lender’s legitimacy with the Better Business Bureau. Start reverse mortgage lender shopping here now.

Apply for your reverse mortgage loan

Apply for your loan next. For this step, you’ll need to fill out a reverse mortgage application with your lender, agree to a credit check, and provide some documentation.

This usually includes:

• Tax returns
• Bank and retirement account statements
• Paystubs
• A copy of your property title/death certificate
• A copy of your home insurance policy
• Your current mortgage statement, if any

If you received a HECM, you must also provide proof that you completed HECM counseling from an approved organization. The Department of Housing and Urban Development (HUD) requires it of all HECM borrowers.

assessment

Once you apply, your reverse mortgage lender will order an appraisal of your home. This is when a third-party professional determines the market value of your home, which is then used to calculate how much you can borrow. Generally, you can borrow at least 40% of the total value of your home, although this depends on your lender and whether you have any additional debt against the property.

Underwriting

During the underwriting phase, your lender goes through your finances and makes sure you meet all the loan requirements and that you submit all the appropriate documents. In some cases, they may ask you to submit additional or updated documents before you can proceed with closing.

off

Once you pay off your loan, you make your payments Closing costs And your reverse mortgage funds will be released. Then you can start using the money as you wish.

Just remember: Reverse mortgages may not have monthly payments, but they do You need to stay current on your home insurance and property taxes. If you don’t, your lender can foreclose on the property.

Learn more about your reverse mortgage options online now.