Understanding the reverse mortgage loan process

A reverse mortgage loan is something that affects not just you but also your heirs or successors after your sad demise. So it is important to understand how the process really works, what all it entails, how it relates to yourself and to the people you leave behind, etc.

Let us first have a quick read of what reverse mortgage really is before understanding what a reverse mortgage loan process really contains. Like any other traditional mortgage, reverse mortgage is a loan that a homeowner takes from a lender where the homeowner uses the home as the collateral or security. The difference between the two mortgages is that in case of traditional mortgage, the homeowner pays the debt down over time with their income. In reverse mortgage, the homeowner does not make any repayments towards the loan and so the loan increases over time. And this continues until the last borrower of this mortgage dies.

After that all the money – the principal sum and the accumulated fee and interest is taken from the sale of the house and the leftover is handed over to the heirs of the original borrowers.

Before seeking an external financer or advisor to help you with your reverse mortgage loan process, it is always a good idea to share this with your family first and get their feedback on whether you should proceed with this type of mortgage or not. Once your decision is final, here is a list of the key steps that are involved in successfully getting a reverse mortgage loan application sorted.

  • When you contact a lender to apply for a reverse mortgage loan, the lender will assign a consultant to your application who will be your sole point of contact for all future correspondence.
  • The consultant books in some time with you to understand what you are thinking and what your requirements and options are for this type of mortgage.
  • Once you have discussed your requirements and have understood all the options that are available for you, the consultant starts the application process that can take anywhere between four and six weeks from any initial enquiry to the final reverse mortgage loan settlement.
  • During this time, the consultant will be in constant touch with you to coordinate with you any documents that are needed and to keep you informed of how your application is progressing.

Although a consultant is the lender’s voice for you for your reverse mortgage loan, there are some decisions that you will have to make on your own in consultation with your family.

  • How do you intend to spend the loan proceeds?
  • How will you manage any medical expenses that occur as you grow old?
  • What are your current financial needs and how closely can you estimate them for the future?
  • Is your family supportive of your decision and how do they see managing this after your death?

As always there is more homework to do before you apply for a reverse mortgage loan application than there is once you have made up your mind and have started the process with a reverse mortgage loan lender. After that the lender works very closely with you to sort all the leg work to ensure you get all the approvals in time for your reverse mortgage loan application.



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