Reverse Mortgage is a product that will allow senior citizens to avail themselves of funds by mortgaging their residential property. The scheme is quite similar to a housing loan except that in a home loan the borrower pays a fixed EMI to the lender, while in a reverse mortgage the lender pays the borrower a fixed sum of money on a monthly (or quarterly) basis, the total payment being equal to the value of the property and the interest on the loaned amount. After the borrower’s spouse, to recover the amount paid out along with interest at a rate similar to interest on housing loans.A reverse mortgage application process generally takes 30-45 days in the whole processing from start to finish. The whole process comprises of five major steps. The average reverse mortgage begins considering a reverse mortgage six months before completing the process. The contract converts a capital value of a home into an annuity over a period of 6 months. This whole process is a bit complex but you can hire FHA Mortgage loan specialists to make it simpler and easier for you.
Eligibility and requirements:
– An individual must be 60 years old or older and must own their own primary residence and should be living there for at least 20 years.
– The loan doesn’t apply on ancestral and commercial property.
– The title of the property must be free and clear. A NOC is required from the society.
– The loan amount must not be used for trading or any other speculative purposes.
– House on power of attorney will not be provided with a reverse mortgage.
– There is no need for credit or income qualification of the borrower.
– The reverse mortgage will be on the current rate of interest.
Procedure for applying for a reverse mortgage
- Initial application: The initial application legally authorizes the lender to begin the application process but the lender cannot incur any cost till the reverse mortgage counseling happens. You can cancel the application process anytime as it is not binding. The interest rates, loan amounts, and reverse mortgage fees are specified in the application process.
- Reverse mortgage counseling: Until the applicant submits the HECM certificate, the lender is not allowed to incur any cost related to the application process. The HECM counseling certificate is proof that the applicant has finished the required counseling session with the HUD-approved counseling agency.
- Appraisal: The appraisal tells the real value of the applicant’s property. An appraiser must follow the specific rules to determine the value and should be done by an FHA approved appraiser.
- Underwriting: A proper property ownership search is conducted by the lender. This also clears up issues with the unpaid lien against the title, trusts, and bankruptcy etc. After completion of the underwriting the lender gives a heads up to the whole process and the status of reverse mortgage changes to ‘clear to close’.
- closing: The applicant and the lender decide the final date for the closure where they meet the attorney or notary for signing the final documents.
These were the basic retirements and procedure to avail a reverse mortgage. You can consult a Mortgage brokerage company in Arizona, they guide you through the reverse mortgage process.