What documents are needed for a reverse mortgage?
Reverse mortgage lenders require borrowers to provide certain documents when applying for a loan. Find out what documents are needed for a reverse mortgage.
A reverse mortgage is a specialized financial product that allows senior homeowners to tap the equity in their homes without having to move out or sell the home. Seniors can use the funds to create an extra cash flow to supplement their retirement income. If you have decided to apply for a reverse mortgage, there are certain documents you will need to have ready.
The documentation you will need to provide relates to your home, personal identification, income, assets, etc. Some of the documents you should gather include your driving license/passport, property deed or title, counseling certificate, proof of income (such as pay stubs, Social Security statement, and income tax return), medical documents, and trust agreements.
Documents needed for a reverse mortgage
Generally, the lender will want to get a full picture of yourself, your finances, and your home, and you will need to gather documents that show your identity, home ownership, proof of income, bank statements, etc.
Here is a rundown of the documents you will be required to provide:
Reverse mortgage application
Since you are applying for a reverse mortgage, the first document you will be required to provide is the reverse mortgage application document. You can obtain this document from the lender, and fill out the form in person or online. Some of the information you will be required to fill in include your personal information and address, list of property owners, list of your incomes and assets, type of home, and any liens on the property.
Reverse mortgage counseling certificate
You will be required to provide a mortgage counseling certificate to prove that you have completed a counseling session with an agency approved by the US Department of Housing and Urban Development (HUD). A counseling session lasts about one to three hours, and it can be done face-to-face or by phone.
The counseling session helps you understand the reverse mortgage process, the loan terms, and how reverse mortgages work. The counselor will also review your finances and provide guidance on which reverse mortgage option is good for you. Usually, the lender will provide a list of HUD-approved counselors that you can contact, or you can find a list of counseling agencies on the HUD website.
Since you are borrowing against your home, the lender will require you to provide certain documents related to your home. Some of the documents you will be required to provide include:
The lender will require you to prove ownership of the property by providing the deed of transfer or the title.
A deed is signed by both the seller and buyer at the time of buying the property, and it shows that the owner of the property has changed. A title, on the other hand, is a legal record of the ownership of the property, and it shows the ownership history and the physical description of the property.
Proof of occupancy
You can only borrow a reverse mortgage against your primary residence. The lender will require you to prove that the property is your primary residence by providing documents such as utility bills, state-issued IDs, motor vehicle registrations, or court documents.
Home survey documents
The survey documents help prove that the property can serve as adequate collateral for the reverse mortgage. It examines the deed and the title to make sure the information is accurate.
Satisfaction of mortgage
If you have paid off your mortgage, you will receive satisfaction of mortgage document from the lender to prove you have made all required payments. It shows that your home is free and clear, and it has no outstanding mortgage obligations.
One of the eligibility requirements for a reverse mortgage is paying homeowner insurance. The lender will require you to provide homeowner insurance documents to make sure the property is properly insured before you can be approved for a loan.
If you are a member of a homeowner association, the lender will require you to provide the homeowner association rules that show how much fees you pay. You will be responsible for paying these fees during the loan term, and you will need to provide proof of payment.
You will be required to prove who you are, where you live, and that you meet the minimum age to qualify for a reverse mortgage. The lender also needs your identity information to conduct a credit check to know your past credit history.
Common documents that you can provide as proof of identity include a driver's license or state-issued identification. The documents can be sufficient to prove you are age 62 or older to be eligible for a reverse mortgage. You can also provide a copy of your Social Security card to verify your Social Security Number.
Proof of income
The lender will want to be sure that you have sufficient incomes to be able to pay home maintenance costs as well as pay ongoing costs of owning your home, including property taxes and homeowner insurance.
If you are retired, you can provide 401(k) statements, pension statements, recent income tax returns, recent Form W-2s, Social Security statements, or a Social Security Award letter if you have been approved for Social Security benefits.
If you own assets like stocks and real estate, you will be required to provide proof of asset ownership to provide a clear picture of your finances. You can provide statements that show your bank balance, stocks, and annuities.
In certain situations, you may be required to provide certain legal documents to prove ownership, certain inherited rights, or another status. Here are some of the legal documents you may be required to provide.
Power of attorney
If you have the power of attorney of a spouse, parent, sibling, or other relatives, you should provide legal documents to prove that you have a right to act or enter into a contract on their behalf.
As a conservator, you have authority over both the person and their finances. If you have been appointed as a conservator, you need to provide legal documents to prove that you can take a reverse mortgage on the person's behalf.
Closing on a reverse mortgage
Once you submit your reverse mortgage application, the lender will start processing your application and supporting documents to determine if you meet the requirements for a reverse mortgage. If the information you provided is insufficient, the lender will require you to provide additional documents.
If the lender is satisfied that you are eligible for a reverse mortgage, your application will be approved and move to close. At closing, you will meet with an attorney to review the loan terms and sign the closing documents. You will also be required to pay closing costs at this stage. After closing, the reverse mortgage will move to a three-day rescission period when you can opt-out of the mortgage penalty fee. Once the three days lapse, you will receive a disbursement from the lender.