The Facts About Applying for Reverse Mortgages

The fact of the matter is, applying for a reverse mortgage loan isn't as painstaking as one might think. It does, however, have its benefits and pitfalls which solely depend on the individual(s) borrowing the loan. The best approach to applying for a reverse mortgage is to arm yourself with facts. Here are a few basic facts to assist you with applying to reverse mortgages.

Take Control of Your Experience

Lenders are fully aware of why you've come to them. They know you are in financial disarray, so they will always be ahead of you with regards to negotiations. They have done deals countless amounts of times, and do so at their best interest, not yours. Do not allow them to apply any pressure on you, or rush you into things. The application is yours, not theirs and at times you may need to kindly remind them of such. Do not hesitate to slow things down, and express any concerns you may have, if any.

Do Your Due Diligence

Have them address any errors you may find in your review of documentation, and only sign corrected versions. Keep a hardcopy of your agreement files in a safe place, and another in a remote location that is secure. There is a major difference between a verbal agreement, and a written one--that is, only one of them can be considered in a court of law, and with financial institutions, legal documentation is all that matters.

Can you guess which one of these agreements that is? You guessed it, the written one. A person can verbally agree to something until the cows come home, but it is not binding until it is on paper.

Cross Your T's, Dot Your I's

The money you receive from the reverse mortgage lender, will first need to be used to pay off the balance on the existing home loan if any. There is no way around paying that because that is usually what prompts the need for the loan. You must also pay any outstanding costs associated with the home, including closing costs, property taxes, insurance, etc.

Be advised that anyone whose name is on the loan application, will be required to remain living in the home and must maintain ownership of the home or the mortgage lender could be entitled to loan repayment, and will be well within their rights to assume ownership of the home. This being the greatest risk in reverse mortgaging giving the loan process a bad reputation.

Wait, Do You Even Qualify??

Mobile homes, trailers, vacation rental homes and apartment complexes are not eligible for reverse mortgage loans as they are considered non-qualifying homes. However, multi-unit single-family home with no more than (4) four units qualifies if the applicant/owner lives in one of the units.

Gaining full knowledge of what you are getting yourself into puts you at a great advantage in applying for a reverse mortgage. You would do well to conduct the same checks on your lenders, as they will conduct on you. Do they have a checkered past? Are their customer reviews genuine, and do the negative comments seem to al fall along the same lines? My advice is to study the lending process like you would a final exam, and the result is your final grade because quite frankly, your life depends on it.