Reverse Mortgage Process
1. Initial Contact
Homeowner contacts Ed at Prime Mortgage (800-835-6939 or 952-540-6161) to discuss the benefits and processes of reverse mortgages. At this time you may also want to visit the following websites for additional information:
www.reversemortgage.org
www.aarp.org
www.hud.gov
http://www.fanniemae.com
2. Certificate of Counseling
Homeowner seeks mandatory counseling from an approved housing counselor, who will discuss reverse mortgages and provide supplemental information about reverse mortgages and other options that may help you. Following the counseling session, the homeowner receives a Certificate of Counseling that is presented to Ed as proof of counseling.
3. Application Procedure
Once the homeowner decides what path they want to take, the next step is to fill out the loan application that includes a selection of payment option (i.e., fixed monthly payments, lump sum payment, line of credit, or a combination of these). At this time, Ed will discuss the homeowner’s estimated total costs, as required by the federal Truth in Lending Act.
In order to proceed with processing, homeowner provides Ed with required information, including photo ID, verification of Social Security number, copy of deed to home, information on any existing mortgage(s) on property, and counseling certificate.
4. Loan Processing
Ed orders the appraisal, title work, lien payoffs, and other necessary paperwork. The appraiser visits you to determine the value of your home and the physical condition of the property.
5. Underwriting
After receiving the necessary information and data, Ed and his staff finalizes the loan details with homeowner (for example, what is the best payment option, how frequent are the loan interest rate adjustments) and submits the loan package to the underwriting department for final approval.
6. Loan Closing
Ed schedules the loan closing once the loan package is approved. Interest rates are calculated, and closing papers and final figures are prepared. The closing costs are financed as a part of the loan. Homeowner meets with the title company to sign the loan papers.
7. Monies Disbursement
Loan funds are disbursed after the three-day “right of recession,” which is the period of time that homeowners have the right to cancel the loan. After three-days, the homeowner receives funds through their selected payment option. Any current debt on the home is paid off and a new lien is established. During the life of the loan, the loan services disburse the payments, advances line of credit funds if requested, collects repayments on line of credit, and sends periodic statements.
8. Repayment Plan
The homeowner does not make monthly mortgage payments to lender during the life of the loan. The loan is paid off when the homeowner no longer occupies the home as a principal residence. Both the heirs of the estate or the homeowner can pay off the loan, with or without a sale of the home. The repayment obligation can never exceed the home’s value or sale price.