HECM Questions you need answered before even starting.
This is from a non-biased counseling session with a HUD trained Counselor
How does the HECM Reverse Mortgage work? Most of these common HECM questions are somewhere in my website, but don’t hesitate to call or ask. The answer is the exact same as any other mortgage except how it is paid back the greatest feature is that there is no repayment of the loan if the homeowner occupies the home as their primary residence*. Borrower is also required to keep the property condition, taxes and insurance payments. The interest or any payments on the house aren’t paid back until the house is sold or the last borrower moves out*.
The non-recourse feature of the Reverse Mortgage insures that the borrower will never be responsible for more than the value of the home.”
How does the Reverse Mortgage process work, what are rates, do I qualify, explain the counseling? We have a highly experienced team of Reverse Mortgage only professionals in Alabama cities such as Huntsville, Birmingham, and Mobile.
Most of the time we find if possible, people would rather conduct business in person if it doesn’t cost them anymore! Our team will help you start to finish with the simple steps to the Reverse Mortgage!
Education -Do your research. Read up on the process as much as you can. Talk to your local Better Business Bureau (BBB) and your local American Association of Retired Persons (AARP) about the process and the lender. The AARP Foundation Reverse Mortgage Education Project includes a national network of reverse mortgage counselors dedicated to helping seniors understand and evaluate the risks and benefits of reverse mortgage borrowing.
Counseling – Federal regulations and state law often requires that reverse mortgage borrowers receive state-certified housing counseling. And while this counseling is mandatory for HECM reverse mortgage borrowers. Counseling appointments typically take about an hour and may be handled in-person or over the telephone. There is a list on another page “steps to a Reverse Mortgage “List of Counseling Agencies–HUD requires each borrower applying for a reverse mortgage loan to receive counseling prior to completing a reverse mortgage transaction.
HUD requires each borrower applying for a reverse mortgage loan to receive counseling prior to completing a reverse mortgage (HECM) transaction. We will provide you more approved agencies upon request.
Loan Application- Our team will assist you in completing the loan application and determine how to receive payment.
These are your options: 1) Monthly payments for a fixed term 2) Line of credit 3) Lump sum 4) Any combination of the above 3
Processing -Your lender will order: A credit report, A title report, An appraisal
We payoff all lien attached to the house.
Underwriting – Once your lender has received and completed the required documentation, your loan package will be submitted to the financial organization that will be underwriting the loan, for final approval.
Closing – After your reverse mortgage loan has been approved and signed, the loan’s initial interest rate will be determined. Closing costs are typically financed by the loan.
Disbursement – Once you have officially closed on the loan, you have 3 business days to change your mind and cancel the loan. After the 3-day period, the funds are disbursed, including any amount that will be applied to a previous lien on the property. Then you will begin receiving payments according to the payment option you selected.
Repayment – You will not be required to make monthly payments during the term of your loan. The reverse mortgage becomes due and payable in full once: 1) the home is no longer being used as a primary residence, 2) it is sold, or 3) the borrower passes away. Upon the death of the borrower, the loan may be repaid from the sale of the home or by refinancing the existing reverse mortgage. All remaining equity belongs to the heirs/estate.