How Long Does It Take to Get a Reverse Mortgage?

A reverse mortgage is a financial product designed for homeowners, typically those aged 62 and older, that allows them to convert a portion of their home equity into usable cash. Unlike a traditional mortgage where payments are made to build equity, a reverse mortgage provides funds without requiring monthly mortgage payments, with repayment generally deferred until the borrower moves out, sells the home, or passes away. Understanding each step can help homeowners navigate the process effectively.

The Initial Preparation Phase

Before formally applying for a reverse mortgage, homeowners engage in a preparatory phase focused on information gathering and fulfilling mandatory requirements. This initial stage involves researching various reverse mortgage options, such as the Home Equity Conversion Mortgage (HECM), which is federally insured, or proprietary loans offered by private lenders, to understand their basic requirements and features.

A mandatory step for HECM loans is completing a counseling session with a U.S. Department of Housing and Urban Development (HUD)-approved independent counselor. This session is designed to ensure the homeowner fully understands the reverse mortgage product, its implications, costs, and available alternatives. While the counseling session lasts between 60 to 90 minutes, scheduling an appointment can take anywhere from three to ten business days. Upon completion, a counseling certificate is issued, which remains valid for 180 days.

Concurrently, homeowners should begin gathering essential documents required for the application. This collection often includes:

• Proof of age and identity, such as a driver’s license, state ID, or passport, along with a Social Security card.
• Financial statements, including recent bank statements, existing mortgage statements, property tax statements, and homeowner’s insurance policies.
• Income documentation, such as Social Security awards letters, W-2s, 1099s, or pension statements, depending on the borrower’s income sources.
• Relevant trust documents, if the property is held in a trust.

The Application and Processing Phase

Once the initial preparation is complete, including the mandatory counseling, the formal application process begins with submitting all collected documents to the chosen lender. The lender then initiates several procedural steps to evaluate the borrower’s eligibility and the property’s suitability.

A property appraisal is a crucial step to determine the home’s current market value and ensure it meets HUD’s minimum property standards. An FHA-approved appraiser conducts this evaluation, which involves an interior and exterior inspection of the home. While scheduling the appraisal and receiving the report can take one to two weeks, the appraisal itself is valid for 180 days. The determined value directly impacts the maximum loan amount a homeowner can receive.

Following the appraisal, the loan enters the underwriting review phase, where a comprehensive assessment of all submitted information occurs. Underwriters review the application, appraisal report, and financial documents to confirm eligibility and evaluate potential risks. They specifically look for property condition, ensuring it meets required standards, and assess the borrower’s financial capacity to meet ongoing obligations like property taxes and homeowner’s insurance. This manual review process can take between 1 to 5 days, or up to 20-30 days after the appraisal is received. Upon completion, the borrower receives a conditional approval, which may include specific conditions or requests for additional documentation before final approval is granted.

Finalizing and Funding Your Loan

After the underwriting process concludes and final approval is issued, the loan moves into its concluding stages, starting with the loan closing. During closing, the borrower signs all final loan documents. Scheduling this appointment usually takes a few business days.

Following the signing of closing documents, a mandatory three-business-day rescission period begins for HECM loans. This “cooling-off” period allows borrowers to cancel the loan without penalty if they change their mind. The three business days include Saturdays but exclude Sundays and federal holidays. Loan funds cannot be disbursed until this rescission period has fully expired.

Once the rescission period has passed, the loan funds are disbursed to the homeowner. This disbursement can take various forms, such as a lump sum, monthly payments, or a line of credit, depending on the borrower’s chosen payment plan. It can take up to a week for the money to be deposited into the homeowner’s bank account. From the submission of a complete application and counseling certificate, the entire process, through to funding, ranges from 30 to 45 days.