If you are in need of money and you need to apply for a loan, there are a number of loan options to choose from. It is imperative that you understand all of them first in order for you to find the best loan option for your current circumstances. In this regard, one of the types of loan you can go for is the reverse mortgage.

What is a reverse mortgage?

The reverse mortgage is actually a special type of home loan in that it allows you to convert a part of your home equity into cash. Here, the equity that you have built up through the years of paying mortgage can be paid back to you.

But unlike the traditional or usual home equity loan, the borrowers of HECM do not have to make repayments until such time that they no longer have the home as their principal place of residence, or if they fail to meet the duties and requirements of the mortgage.

Applying for a reverse mortgage

Applying for this type of loan requires a number of steps. You should also familiarize yourself with these before you go full force in applying for a reverse mortgage. This way, your application will be faster, easier and smoother.

Talk to a reverse mortgage expert

Before you sign or choose any agreement on a certain reverse mortgage plan, it is best if you talk to a company representative or expert first. This way, you will be able to understand the entire process and ready the requirements.

An expert or representative from the company will also lay down your options for you. He or she can help you decide whether a reverse mortgage is the right type of loan that you should avail of. At the same time, he or she will discuss with you the qualifications for a reverse mortgage.

Fill out the application

The next step would be to fill out an application for a reverse mortgage. Here, you will also be making a decision as to how you will like to receive the amount that you are borrowing. Do you want it in lump sum, monthly payments, a credit line or a combination of all of these?

Counselling

This is a must for reverse mortgage application. It is required by the Department of Housing and Urban Development of the United States. Here, you must receive third party counselling where you will learn all the options available and the details of such.

Appraisal and inspection

This step will determine the market value of your home. It is also where the lending company will know if your home fit the government guidelines. The one doing the appraisal and inspection will also determine whether there are necessary repairs to be done to your home.

Underwriting

After the appraisal comes underwriting. You will have to submit all the necessary documents and paperwork. This is the part where the details of your reverse mortgage will be finalized by the lending company.

Closing

Finally, you will have to sign documents and pay the fees before the money is given to you. A representative from the company should meet you and discuss the final details. Once you both agree, you will then have to sign the papers to close the deal. You will then receive the loan amount in due time.

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