How Long Does It Take to Do a Reverse Mortgage?

A reverse mortgage allows homeowners, typically aged 62 or older, to convert a portion of their home equity into cash without selling their home or making monthly mortgage payments. This article explores the timeline for obtaining a reverse mortgage, from initial steps to receiving funds.

Overall Reverse Mortgage Timeline

The process of securing a reverse mortgage generally takes between 30 and 60 days to complete. Planning for a 45-day process often provides a more realistic expectation, allowing for potential delays. The timeline includes initial preparation, the formal application and underwriting period, and the final closing and funding stage.

Initial Requirements and Counseling

Before a formal application, homeowners must complete a mandatory counseling session with a U.S. Department of Housing and Urban Development (HUD)-approved counselor. This counseling ensures borrowers understand the financial implications, responsibilities, and alternatives to a reverse mortgage. The session typically lasts about 90 minutes and can be conducted face-to-face or by telephone.

Following counseling, the homeowner receives a certificate of completion, a prerequisite for the loan application. Borrowers then gather necessary documents, including proof of age (e.g., driver’s license, Social Security card), property ownership documents (e.g., deed, title), existing mortgage statements, homeowners insurance policies, and recent property tax statements. Basic financial information, such as bank statements and income sources like Social Security awards letters or pension statements, is also required.

Application Submission and Underwriting

Once the counseling certificate is obtained and initial documents are gathered, the formal application can be submitted to a lender. The lender then begins a review. The property appraisal is a significant component, determining the home’s value and influencing the potential loan amount. This FHA-required appraisal involves a physical inspection, photographs, measurements, and research into comparable home sales. It typically takes 15 to 30 days to complete the appraisal process, from scheduling to final valuation.

A title search is also conducted to identify any existing liens, ownership issues, or encumbrances on the property. Common title issues include errors in deeds, undisclosed liens, or missing heirs. The lender also performs a financial assessment, evaluating the borrower’s credit history, debts, and income to ensure their ability to meet ongoing property obligations like taxes and insurance. This assessment helps prevent future defaults and may require borrowers to provide tax returns and bank statements. Unlike traditional mortgages, reverse mortgage underwriting is often a manual process, with an underwriter reviewing all submitted documentation for compliance and approval. This review can result in approval, approval with conditions, or denial, sometimes requiring additional documentation from the borrower.

Closing and Receiving Funds

Upon successful completion of underwriting and final loan approval, the closing phase begins. During closing, the borrower signs numerous legal documents, including the promissory note, outlining the loan terms, and the mortgage or deed of trust, establishing the lien on the property. A Settlement Statement is also provided, detailing all closing costs, interest rates, and net proceeds. The closing appointment itself usually takes about an hour.

Following the signing, a three-business-day right of rescission period commences. This period allows the borrower to cancel the loan for any reason without penalty. The right of rescission period includes Saturdays but excludes Sundays and federal holidays. Funds are disbursed to the borrower only after this rescission period expires and any existing liens or mortgages are satisfied from the loan proceeds. It may take a few additional days for the funds to be available in the borrower’s bank account.

Influences on the Timeline

Several factors can affect how long it takes to complete a reverse mortgage. Borrower responsiveness plays a significant role; promptly providing requested documents and information can prevent delays. Delays can also arise from property appraisal issues, such as the need for repairs to meet FHA standards or difficulty finding comparable home sales. If a second appraisal is required by HUD, this further extends the timeline.

Title issues, such as unreleased liens or complex ownership histories, can also prolong the process as they require resolution before closing. The workload and efficiency of the lender and third-party service providers, like appraisers and title companies, can impact the overall speed. The complexity of the borrower’s financial situation, particularly if the financial assessment reveals concerns about paying ongoing property charges, might necessitate additional steps like setting aside loan proceeds for taxes and insurance, which can extend the timeline.