An HECM reverse mortgage loan is a federally funded loan option that is suitable for individuals above the age of 62 to increase their post-retirement income. Here we will inform about the step-by-step process of obtaining the HECM loan.
Step By Step Process to Obtain the HECM Loan
Step 1. Gather Information
Before applying for an HECM loan, you must find out about loan eligibility requirements and restrictions. Once you know about the loan option, you will be able to make a more informed decision. If required, you should also involve your immediate family members and personal financial advisor in the information search process.
Step 2. Take Counseling from an HUD-approved Agency
To become eligible for the HECM reverse mortgage loan, you need to receive counseling from a third party that is approved by the United States Department of Housing and Urban Development (HUD). The counselor will provide you with in-depth information about the mortgage option. You can contact HUD directly to schedule a meeting with an approved HECM loan counselor.
Step 3. Contact HUD-approved Lender
Once you are fully aware of the loan program, you need to contact an HUD-approved lender. You can schedule a free consultation with the lender to know about loan terms and conditions. You will be given an application form in which you should enter your contact information, and the mode of payment. Options include the following.
* Lump Sum
* Monthly payments
* For a specified period
* For as long as you reside in the home
* Line of Credit
* A combination of the above
The lender will process your application and perform an appraisal of your credit position, income, title documents, and lien payoffs. An independent appraiser will determine the value of the loan and identify repairs that must be performed before the loan application is approved.
Step 4. Underwriting and Closing of the Loan
After the lender is satisfied with the application and the appraisal report, the loan terms will be finalized, and submit the loan for underwriting and for final approval. You will be given a closing paper that contains the loan figures. Once you sign the payment, you will begin receiving the payments as per your specified options.