If you’re considering a reverse mortgage, which allows homeowners 62 and older to tap into the value of their home, there are a number of documents to pull together before you schedule your required counseling session and submit your application.
Here's a list of some of the forms you’ll need:
1. Income and Expense Records
Before you visit a reverse mortgage counselor, you’ll need to have an idea of how much money you have coming in, how much you owe, and how much more you’ll need. You’ll need to verify your expenses including housing, utilities, food, transportation and health care costs.
2. Existing Debt Information
If you have an existing traditional mortgage (or two), you’ll need to provide documentation showing how much you still owe, since this amount will be paid off with the proceeds of your reverse mortgage and ultimately determine how much cash or credit will be available. If you have any other existing debts, such as a lien on your home, you’ll need to disclose that and have documentation as well.
3. An Estimate of Your Home’s Value
Next to your age, the value of your home is the most important factor determining how much you can get out of a reverse mortgage. Before counseling, you don’t need to pay to have an official appraisal of your home, according to Sue Hunt of the Consumer Credit Counseling Service of Greater Atlanta. She suggests calling a real estate agent who does business in your area for an estimate of your home’s value. Or you can check Zillow.com. Later, when you actually submit your application to a lender, you’ll have to get an official appraisal. This can be arranged by your lender, and it’s required before any binding papers can be signed, says Johnnie Vineyard, a certified counselor at the Consumer Credit Counseling Services of Greater Greensborough in Greensborough, N.C.
4. Power of Attorney
If you have power of attorney for someone else, you’ll need to provide copies of documents verifying this, says Vineyard.
Before you go into counseling, find out how much you’ll have to pay for it and when you’ll have to pay. You may have to pay at the time of your counseling session, or it may come out of your reverse mortgage proceeds. In some cases, such as a financial hardship, you may not have to pay a counseling fee at all. You should not have to pay any fees to a lender before you’ve received reverse mortgage counseling and receive a certificate proving that you received counseling.
6. Proper Identification
You’ll have to provide a photo ID such as a driver’s license or passport, which will also prove that you’re at least 62 years old. Joe DeMarkey, a regional director and reverse mortgage specialist for MetLife (Stock Quote: MET) says you’ll also need a copy of your Social Security card to further verify your identity.
7. Proof of Ownership
Additionally, you’ll have to provide proof that you own your property and that it’s your principle residence using, for example, a property tax bill or deed to your home.
8. Certificate of HECM Counseling
After your reverse mortgage counseling session, make sure you have a certificate. This is written proof that you’ve received counseling, and it’s required when you apply for an Federal Housing Administration-insured reverse mortgage. Borrowers are not obligated to sign any binding agreements and lenders charge any fees until the certificate of counseling is received by the lender.
9: Homeowners Insurance
In order to get a reverse mortgage, you’ll have to have homeowners insurance. You’re essentially tapping the value of your home for cash and lenders want to make sure your home retains its value.
10. If Necessary: Proof of an Immediate Hardship
If you have major medical expenses or another type of immediate hardship, or if your expenses and debt payments are more than your income, you may not have to pay a counseling fee, or you may be able to pay it out of the proceeds of your reverse mortgage, but you’ll need to provide proof of your hardship.
11. If Necessary: Partner's Death Certificate
“If the property was held jointly and one of the spouses has passed away, you’ll need a death certificate which gets submitted with the reverse mortgage application,” says DeMarkey. If you don’t already have a certified copy of your spouse’s death certificate, you can get one through the city or municipality where your spouse passed away.
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