All details of the reverse mortgage loan are finalized during closing. After the loan has been approved, the final figures and options such as the borrower’s preferred payment plan are prepared, and both parties then meet to sign the agreement.
Learn more about what’s involved in the closing process, including costs, withdrawal limits, and settling mandatory obligations such as an existing mortgage.
The closing of the reverse mortgage is scheduled after the loan application has been approved by the loan underwriter. The borrower and the title agent or attorney will be signing the documents of the reverse mortgage loan.
During closing, the lender should verify the borrower’s chosen payment plan and present the closing documents including the final figures in the loan. Most closing costs can be paid through proceeds from the loan, but the borrower can pay them out-of-pocket if they so choose.
The amount you can withdraw from a reverse mortgage is limited during the first year after the loan closing date. You can generally withdraw up to 60% of the total available funds.
If you have an existing mortgage or other liens on your home, you can exceed the 60% limit. Existing mortgage is a mandatory obligation that you must pay off to qualify for the reverse mortgage. You will be allowed to withdraw enough to pay the existing mortgage, plus an additional 10% of the total available funds, even if these go over the 60% limit.
Notes on Closing
It usually takes a few days to verify that all fees and payoffs have been paid, schedule the date of closing, prepare all documents and ensure that all parties involved are updated with the details. You will not be pressured to close by a certain date if you are not available or hesitant to close.
Next step: Disbursement