Unlike a traditional mortgage where the balance decreases over time as you make payments, with a reverse mortgage, that balance increases as interest and fees are added on a monthly basis. Reverse mortgage funds, which are only available on primary residences and to people over the age of 62, are structured as lump sums or lines of credit that can be accessed on an as-needed basis. What Is a Reverse Mortgage?Ī reverse mortgage is a lending option that lets homeowners who’ve paid off all or most of their mortgage to tap into their home equity. If you think a reverse mortgage might help you stay in your home through retirement, make sure you understand the risks and rewards so you can make a better-informed decision. Reverse mortgages can also come with variable interest rates so your overall costs could increase down the road. Reverse mortgage lenders impose high fees and closing costs, and borrowers must pay for mortgage insurance. However, reverse mortgages come at a cost, so it’s critical to know all the terms upfront. If 30 days is a drop dead date before something catastrophic happens, I would advise a Plan “B”.A reverse mortgage may seem enticing if you’re retired and struggling with expenses on a fixed income. Therefore I always like to be honest with folks and tell them that yes, the loan can close in 30 days and many do but you are better off planning for 45 and even then, if some unforeseen circumstances arise that delay your title or appraisal, it could take longer. We never know when an old lien will show up on your title that might take a while to track down the lender and remove, when the appraiser will call us and tell us that he/she can’t find any sales and it “going to take a while”, when HUD will suddenly make an unannounced change that sends the entire industry into a frenzy (as it did in September of this year) or when a natural disaster will strike. The problem is, we can’t tell you which loans in advance will be those lucky loans. The normal flow of things is interrupted at such times and it taxes the staffs when they have to now work on each loan two, three or even four more times and that slows down their ability to handle the same volumes.Īnd finally, through it all, when the pieces do fall into place (the borrower does have their counseling already done, they return their signed application without delay and the service providers hit no delays), we have loans that do close in less than 30 days quite often. We just came out of Hurricane season and were greatly impacted by two massive hurricanes as well as the many wildfires throughout the western United States.Įven if you don’t live in an area affected by the disasters, lenders and other service providers are bogged down by loans having to be reviewed and re-reviewed and held up just before closing. We have holidays and vacations with which to contend and even if there is no one out at the lender’s shop, we work with appraisers, title companies, escrow, attorneys and other third party services that may have staff out at their shops that affect their service levels this time of the year. Then you have to consider the time of year. Or if you live anywhere in which you are considered rural, or there are few FHA approved appraisers in the area or very few recent sales of similar homes, it can take appraisers just as long in other states as well. It can take 4 weeks just to get an appraisal back. Washington, Oregon, and Colorado fall into these categories. Some parts of the country are notorious for taking extremely long on appraisals. Then the location can also work against you with other services. That means if you live in California or one of these other states and it takes just 2 days to get an appointment, you are dead in the water until after you receive the counseling and in California, that’s 9 days into that 30 day time frame already and the lender has not been able to really start the loan by law. It is much easier to get an appointment now, but in some states, there are other requirements such as no application until after the counseling or as in CA, a 7 day cooling off period during which time the lender can do nothing on the loan.
Right after HUD made the announcement that they were going to change the program in 9/2017, counseling agencies were jammed and appointments were harder and harder to get. If your counseling has not been completed, then you have to get an appointment and that is sometimes easier to do than others. Every borrower has to have the HUD mandated counseling before we can do very much with your loan and many states also have counseling requirements.
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