Step 1: Awareness

Homeowner learns about the reverse mortgage program from a news article, advertisement, word-of-mouth, seminars, financial advisor, etc.

Step 2: Action

If necessary, homeowner seeks additional information by contacting a reverse mortgage lender or the National Reverse Mortgage Lenders Association.

Step 3: Counseling

Homeowner seeks counseling from a HUD-Approved Counseling Agency, or AARP-Trained Telephone Counselor. Counseling is mandatory regarless of which reverse mortgage product you choose. Counseling is usually conducted face-to-face, unless you use an AARP counselor. The counselor provides supplemental informatino on reverse mortgages, determines whether you're eligible to get a reverse mortgage, and discusses other options that may be available to assist with your daily living. The homeowner will be given a certificate to give to the lender as proof they were counseled.

Step 4: Application/Disclosure

Homeowner fills out loan application and selects payment option: fixed monthly payments, lump sum payment, line of credit, or a combination of these. Lender discloses to homeowner the estimated total cost of the loan, as required by the federal Truth in Lending Act. Lender collects money for home appraisal. Homeowner provides lender with required information, including photo ID, verification of Social Security Number, copy of deed to home, information on any existing mortgage(s) on property, and counseling certificate.

Step 5: Processing

Lender orders appraisal, title work, lien payoffs, etc. An appraiser comes to your home. The appraiser assigns a value to the home and determines the physical condition of the property. If the appraiser uncovers structural defects that require repair, the homeowner must hire a contractor to complete the repairs after the reverse mortgage closes.

Step 6: Underwriting

After receiving all pertinent information and data, lender finalizes loan parameters with homeowner (i.e., determining payment option, frequency of loan interest rate adjustments) and submits loan package to underwriting department for final approval. Currently, it can take anywhere from 4-8 weeks (sometimes sooner) to complete the underwriting of a loan package.

Step 7: Closing

If the loan package is approved, closing (signing) of loan is scheduled. Initial and expected interest rates are calculated. Closing papers and final figures are prepared. Closing costs are normally financed as part of the loan. Lender or title company has homeowner sign loan papers.

Step 8: Disbursment

Homeowner has three business days after signing papers in which to cancel the loan. Upon expiration of this period, the loan funds are disbursed. Homeowner accesses the funds in the form of the payment option selected. Any existing debt on the home is paid off. A new lien is placed on the home. The homeowner may use the loan proceeds for any purpose. During the life of the loan, the loan "servicer" disburses monthly payments to the homeowner (if this option is chosen), advances line of credit funds upon request, collects any repayments on the line of credit, and sends periodic statements.

Step 9: Repayment

Reverse Mortgage of West Texas

We're Here to Guide You Through Each Step!

8200 A Nashville Ave., Suite 208
(Inside the State National Bank)
Lubbock, Texas 79423

806-793-3944