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Step 1
Verify you will meet the eligibility requirements. The most common type of reverse mortgage is regulated by the U.S. Department of Housing and Urban Development (HUD) and is called a HECM, or Home Equity Conversion Mortgage. For this loan you must be at least 62 years old and own your own home. You should have considerable equity already built up into your house.
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Step 2
Determine if your home will qualify for a reverse mortgage. That means it should be your primary residence. It can be either a single family or have up to 4 units as long as you currently reside at the location. A mobile home will not be eligible. Certain condos or manufactured homes may be eligible if they meet other classification requirements.
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Step 3
Find out if you already have debt against your home, like an existing home equity loan. This must be repaid before applying. Another option is to apply for a large enough lump sum and use this money to pay off any existing home loans immediately.
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Step 4
Consider your payout options. You can receive money from your reverse mortgage as a one-time lump sum, regular monthly payments, or a line of credit you access as needed. Another option is some combination of all three. How much total cash you receive will depend on your home’s value. Also consider the cost of the loan. Costs for a reverse mortgage are high. Fees over the life of the loan can up quickly.
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Step 5
Contact a HECM counselor to schedule a time to meet and review the requirements for a reverse mortgage. This is a prerequisite for any HECM loan. At the end of your session you will receive a certificate and you are now eligible to apply for the loan.
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Step 6
Contact a FHA-approved lender to apply for your reverse mortgage. Be wary of any lender that tries to sell you additional financial products or use scare tactics to rush you through the process.
