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Reverse Mortgage Application Process

The application process for a reverse mortgage typically takes about 30 to 45 days from start to finish and involves five major steps. Here's a quick overview so you know what to expect:

Step 1: Initial Application

The application legally authorizes the lender to begin the process. However, the lender cannot incur any costs on your behalf until Step 2 (counseling) is completed. The application is non-binding and can be canceled at any point during the process.

Step 2: Reverse Mortgage Counseling

Even if the application has been submitted, the lender is not legally permitted to incur any costs (such as ordering the appraisal) until the applicant provides a signed HECM Counseling Certificate. This certificate confirms that the applicant has completed the mandatory counseling session with a HUD-approved counseling agency.

Step 3: Appraisal

The appraisal determines the legal value of the applicant’s property. It must be conducted by an independent HUD-approved appraiser (not all appraisers have this approval) and must follow specific HUD guidelines. Even if the homeowner already has an appraisal, a new one will likely be required.

Step 4: Underwriting

The underwriter reviews all documentation and identifies any conditions that must be satisfied prior to closing. Once these conditions are met, the final closing date can be scheduled.

Step 5: Closing

The lender and applicant set a closing date, during which a notary or attorney meets with the applicant to sign the final documents. After signing, there is a three-day “right of rescission” period, allowing the applicant to cancel the loan without penalty within three business days of closing.

Note: The three-day rescission period does not apply to the HECM for Purchase product.

After Closing

Once the rescission period ends:

• The title company will issue a check or wire the funds to the borrower’s account
• If the reverse mortgage proceeds are being used to pay off an existing mortgage, the title company will also send the payoff amount to the lender