(1888PressRelease)
March 27, 2006 - Reverse mortgage is a loan for senior citizens. It allows them to convert a part of their equity in their homes into tax free income without selling the house or transferring the title.
In this type of mortgage instead of making a monthly payment to the lender, the lender pays you. And that is why it is called reverse mortgage.
Steps involved in getting a reverse mortgage.
- Awareness – The first thing that a homeowner should do is, learn about the reverse mortgage by reading some articles on the net, talking to some experts etc.
- Counseling – You should have some counseling before you apply for the reverse mortgage. It is generally conducted face to face. The counselor will provide you with supplemental information on reverse mortgage which will help to decide whether you are eligible for reverse mortgage or not.
- Application/Disclosure – After counseling if you are eligible for reverse mortgage then you should fill out the form and select your payment options from fixed monthly payment, lump sum money, line of credit or a combination of these 3. After all this the lender will disclose the estimated total cost of the loan.
- Processing – after the application and disclosure the lender orders a appraisal, title work, lien payoffs etc. If the appraiser finds any physical defect in the property that requires repairs, then the homeowner must get it repaired after the reverse mortgage closes.
- Underwriting – After the lender receives all the appropriate information and data, the lender finalizes all the loan parameters and submits it to the underwriter for the final approval.
- Closing – If the loan package is approved by the underwriter then the closing date is fixed. Expected rates are calculated. All the papers required at the closing are prepared. Generally the closing costs are financed as a part of the loan.
- Disbursement – A homeowner has three days after the closing to cancel the loan. After this period ends the loan amount is disbursed through the selected option. If there are any debts on the property then it is paid off and the new lien is placed on the property. The borrower can use the loan proceeds for any purpose he wants.
Reverse mortgage gives an opportunity to senior citizens to get a home even after retirement. But like any other mortgage program, one needs to be aware of all the basics and take some financial advice before applying for a reverse mortgage.
Mortgage
Mentor
is an accomplished writer specializing in mortgage. At present she is working with MortgageFit. You can also visit our Mortgage Terminology section to know about the all mortgage related terms.
