Learn the underwriting steps in qualifying for, applying for and closing on a federally insurance home equity conversion mortgage (HECM).
1
Underwriting Qualification
To qualify for a reverse mortgage borrowers must meet only a few critical criteria:
1. Homeowner (including houses up to 4 units, condo, PUD's, some mobile homes)
2. Owner occupant of your home
3. The younger borrower (of a married couple for example) must be age 62 or older (no maximum age)
4. The value of the property, once adjusted by the age and current interest rate, exceeds the value of any liens (i.e. not upside down).
5. The applicant intends to remain in the home and the house is not currently listed for sale.
2
Application Process
1. All applications are in writing.
2. There is no verification of assets or income, nor is credited used to qualify for the loan, BUT credit reports are drawn to determine a history of bankruptcy and fraud which could be used as a negative if they are recent.
3. The applicant has to complete a certified counseling session prior to proceeding. This takes about 45 minutes and is paid for by the borrower and is done completely independently of the lender.
4. Read and review all disclosures, speak with a trusted family member or legal advisor.
3
Closing
1. Closing is like any other title/escrow closing.
2. Ask for all number documentation to be sent in advance of the closing if possible.
3. All liens are paid at closing.
4. One week after closing you should follow up with all lienholders to confirm that they have been paid (do not trust the title company alone).
5. Enjoy your reverse mortgage!
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