Step 1: Talk to a Reverse Mortgage Advisor
The first thing we recommend doing if you are ready to apply for a reverse mortgage is to talk to one of our reverse mortgage loan advisors. They will assess your specific circumstances and provide you with an estimate of the amount of money you could potentially receive through a reverse mortgage.
In addition, they will be able to answer any questions or concerns you may have to ensure that a reverse mortgage is the right option for you. Your reverse mortgage advisor will walk you through exactly what you can expect and will be your personal resource as you go through this process.
Step 2: Complete a Counseling Session
Once you complete your free financial review with your reverse mortgage advisor, you will need to complete a counseling session with a third-party counselor approved by the U.S. Department of Housing and Urban Development (HUD).
This will need to be completed before your application can be submitted. Your reverse mortgage advisor cannot make this appointment for you, but he or she can give you a list of counselors you can contact to set up an appointment.
The purpose of the counseling session is to educate qualified homeowners about the features of a reverse mortgage, who a reverse mortgage is appropriate for, and go over other financial options. The counseling session can be completed in person or over the phone. It typically takes about an hour and a half to complete.
Once completed, you will receive a certificate that you will present to your reverse mortgage loan advisor.
Step 3: Submit Your Application
As soon as your reverse mortgage loan advisor receives the certificate of completion from your counseling session, your application may be submitted. Your advisor will help you get the application filled out and will notify you of any documentation that needs to be included.
This may include items such as a photo identification, a copy of your homeowner’s insurance policy, and your most recent property tax bill.
The sooner you can get all the required documentation submitted, the sooner you will be able to close on your loan.
Step 4: Order an Appraisal, Title Report, and Other Information
Once your application is submitted, Mutual of Omaha Mortgage will order an appraisal of your home. The purpose of the appraisal is to assess the condition of the home and establish the market value. This will help the lender determine how much equity is available in your home and your total loan amount. This may take one to two weeks to complete.
In addition, the lender will perform a title search and request a credit report. The purpose of the title search is to check for any tax liens on the property. If there is a tax lien on the property, this is a factor that can slow down the approval process.
There is no credit score requirement to obtain a reverse mortgage, but the credit report will allow the lender to get a picture of your overall financial health.
Step 5: Processing and Underwriting
The application and all related documents will be sent for review and processing by the underwriting team. While the underwriting process for a traditional mortgage is typically automated, underwriting for a reverse mortgage is a manual process.
The underwriter will verify that you meet all the reverse mortgage requirements and that you have submitted all the necessary documentation for approval.
The underwriter will either approve, approve with conditions, or deny. If you are approved with conditions, this will typically mean that there’s additional documentation that needs to be submitted or a home repair that needs to be done before the loan can be finalized.
Your reverse mortgage loan advisor will reach out to you if there is any additional documentation or repairs that need to be done.
Step 6: Close on the Loan
Once the application and documentation have been processed, a closing date will be scheduled. The closing documents can be signed with the help of a mobile notary, a closing agent, or a lawyer. This can be done at home, at the office of the title company, or at another location.
Step 7: Receive Your Funds
There is a waiting period that lasts for three business days before you can start receiving your funds. Once that period is over, you will start to receive your funds.
You may receive your funds as a lump sum, monthly payments, a line of credit, or a combination of the three. You will choose how you want to receive your funds during the application process.
If you still have a mortgage or other lien on your home, the reverse mortgage will also pay off those loans.
Frequently Asked Questions
What is a Home Equity Conversion Mortgage (HECM)?
A home equity conversion mortgage, also known as a HECM loan, is the most common type of reverse mortgage loan. It is a federally backed home loan that is insured by the Federal Housing Administration (FHA) and regulated by the U.S. Department of Housing and Urban Development (HUD).
A HECM reverse mortgage can only be obtained from a licensed reverse mortgage lender such as Mutual of Omaha Mortgage.
A reverse mortgage is a home loan that is like a regular mortgage that is taken out against equity you already have in your home. It is specifically designed for older homeowners who are a minimum of 62 years of age, and it can only be used on a property that is the principal residence of the borrowers and is in good condition. This means that it cannot be used on investment properties or vacation homes.
Unlike a regular mortgage, home equity loan, or home equity line of credit (HELOC), a reverse mortgage does not require you to make monthly mortgage payments to pay it back. On the contrary, the mortgage company will disburse the loan proceeds to you in the form of a lump sum payment, monthly installments, a line of credit, or a combination of those methods.
Unlike a home equity loan or HELOC, a reverse mortgage is not a second mortgage. When you take out a reverse mortgage, it pays off your current regular mortgage, if you still have one, and it becomes the primary mortgage you have on the home.
HECM borrowers are still required to pay property taxes, homeowners insurance, and maintain their homes. A reverse mortgage loan is settled once the borrower relocates, sells the property, ceases to use the home as their main residence, or passes away
How Much Money Can You Receive From a Reverse Mortgage?
The amount of money that you receive from a reverse mortgage is based on three factors: the home’s value, the age of the youngest borrower, and the current interest rates.
To get a more specific idea of how the potential reverse mortgage proceeds you might be able to obtain, check out our reverse mortgage calculator or reach out to one of our reverse loan officers, who will be able to give you a realistic estimate.
How Long is the Reverse Mortgage Process?
The reverse mortgage process can take up to 45 days from when you submit your application. However, your reverse mortgage loan advisor will do everything he or she can to expedite the process.
What if You Change Your Mind?
A reverse mortgage is categorized as a non-recourse loan. This means applicants can cancel the application at any time during the process, including three business days after signing the closing loan documents. This is why there is a waiting period for reverse mortgage borrowers to observe before receiving their reverse mortgage funds.
If you’re ready to move forward with a reverse mortgage, learn more by grabbing our free reverse mortgage guide or find a reverse mortgage loan officer here.
Is Mutual of Omaha Mortgage right for you? Don’t take our word for it. Check out these Mutual of Omaha Reverse Mortgage Reviews to see what our customers are saying.
Borrower must occupy home as primary residence and remain current on property taxes, homeowner’s insurance, the costs of home maintenance, and any HOA fees.
This information is intended to be general and educational in nature and should not be construed as financial advice. Consult your financial advisor before implementing financial strategies for your retirement.
