What are the steps to apply for a reverse loan? Is it the same as applying for a traditional mortgage or is it different?
It is just like applying for a regular loan, except the borrower won’t have to make any mortgage payments but they will still be responsible for maintaining their home, paying the property taxes, and Homeowners insurance.
The loan application is standard, but there are many lender, state, and federal disclosures to sign in the application package. It does require quite a few signatures and a complete copy of it is left with the applicants to save and review.
Along with the signed application, copies of bank statements, Social Security card, Drivers License, Declaration page for Homeowners insurance, Trust ( if there is one), and any mortgage statements for the property, plus a signed HUD Counseling Certificate.
The file and documents are sent to a loan processor, Escrow is opened and a Title Policy is ordered, along with an order for an appraisal to be scheduled.
When the loan processor has all the necessary items to make the file complete, it is sent to a Lender for Underwriting.
They review it and make sure it is complete prior to giving it an approval. Sometimes they may request a few additional items, but nothing that is unusual.
The next step is to order the loan documents and coordinate with Escrow, assign a Notary to meet with the clients and have them sign the documents.
The documents are returned to the Closing Department of the Lender, they review them for all signatures, communicate with Escrow to finalize closing figures and after the 3-day Right of Recession, the loan funds and closes.
The entire process takes approximately 45 days as long as the borrower has provided all of the necessary documents that are needed for the file.
Appraisals can cause a delay, or issues with the Title of the property, and sometimes the lack of cooperation from the borrower will cause the loan to take longer to complete.
Applying for a reverse loan is generally not difficult and can be completed in a reasonable amount of time.
We can never know what might or could happen in our lives from day to day. Recently it has been the pandemic of Covid-19 that has killed almost 200,000 Americans as I am writing this and the extreme fall-out from it which has created a massive amount of people who have lost their jobs and businesses.
Then there are the weather events. Massive killer fires in the western half of our country and the East and the South have to face more hurricanes and flooding. No one feels safe anymore and if you are a senior, even less so.
And that is why more seniors are seriously considering using a reverse loan so that they have money that is “banked” and available to them no matter what happens.
One example would be they have an insurance claim for damage to their home and the insurance company is fighting with them over it, at least they have money in the meanwhile to take care of their personal needs until they reach a settlement.
Add in isolation for seniors due to Covid-19, and anxiety about money is not a positive situation, but at the least having enough money reduces some of it, and about how to pay for food, care giving and other monthly expenses.
If a senior has been relying on income from being employed to pay their mortgage payment, but now they are unemployed, they could refinance into a reverse loan that doesn’t have a monthly payment.
But reverse loans have a reputation for being expensive, but are they? They have the same costs as a traditional loan, but many people have heard they are expensive, but in truth, they are not.
Now more than any time in the past, is the time to learn about reverse loans, how much money you could receive, and if doing one is your best option to eliminate your worries and fears about the future.
Contact me for a chat about your situation and find out if a reverse loan be of value to you.