10 Questions You Must Ask Your Loan Officer

1. Do I qualify for a reverse mortgage? What are considerations for my younger spouse, property, or credit and income that I should be aware of?

When it comes to a reverse mortgage, like any other loan, there are qualifications that you will need to meet. You may be a good candidate for a reverse mortgage if you have sufficient equity in your home, plan to continue living in your home as your primary residence, and meet financial obligations – most notably, paying property taxes, insurance, and home maintenance expenses. While your reverse mortgage Loan Officer can talk through each of these points in greater detail, here are some considerations to note.

If you have a younger spouse, they may qualify as a full co-borrower or eligible non-borrowing spouse depending on their age and your situation. While HECMs require all borrowers (and co-borrowers) to be age 62 to qualify, certain states have younger age minimums for other proprietary products, such as Longbridge Platinum. For spouses younger than these age minimums, they may qualify as an eligible non-borrowing spouse. You can learn more about eligible non-borrowing spouses here.

When it comes to considering a HECM, you’ll need to see if your property qualifies. While single-family homes are the most common type of property eligible for a reverse mortgage, homeowners of multi-family homes may still qualify – as long as one of the units is your primary residence. Other property types that may qualify for a reverse mortgage include manufactured homes and HUD-approved condominiums. While your Loan Officer can answer any questions you may have about property requirements, you can also learn more in our article.

Perhaps one of the top benefits of a reverse mortgage is that monthly mortgage payments are optional¹. As such, having a high credit score is not necessary to qualify for the loan. While there is no minimum credit score required for a HECM, a credit check will be ordered to calculate residual income and verify whether you have any federal tax liens or delinquent debts that may affect your eligibility. Your Loan Officer can also work with you to identify any extenuating circumstances that may explain your credit history. For more information on credit requirements, you can also read our article.

2. What should my spouse and/or children know about the reverse mortgage program?

Every family is different – and as such, you likely have your own thoughts on how a reverse mortgage may affect your children. With a reverse mortgage, your home can still be left as an inheritance for adult children. In this situation, your heirs would be responsible for repaying the loan – which is most often done by simply selling the home and using the proceeds. In the event that your heirs do not wish to sell the home, they have the option to pay off the loan using other sources of funds.

As with any important financial decision, many borrowers look to their loved ones for support and guidance in the process. At Longbridge, we highly recommend and encourage family members and children to be involved in all major steps – from the presentation of numbers, to counseling, application, and closing. If you’d like your spouse, children, or another family member to be involved in the process, simply let your Loan Officer know. They can be in direct contact with your family to make sure any and all questions are answered. Your Loan Officer can also help facilitate the conversation with family members who may not be as familiar with reverse mortgages. For more on what adult children and heirs should know, check out our webpage here.

3. What differentiates you and your company?

With so many lenders offering competing services at varying costs, it can be overwhelming to choose the lender that is best fit for you. At Longbridge, reverse mortgages are all we do. We’re a Federal Housing Administration (FHA) approved lender and our loan program is insured by the U.S. Department of Housing and Urban Development. We also maintain an A+ rating with the Better Business Bureau. And we’re a proud member of the National Reverse Mortgage Lenders Association (NRMLA) and fully subscribe to its Code of Ethics. But beyond these accolades, perhaps the area that separates us most from other lenders is our unrelenting commitment to customer service. In fact, we feel so strongly about going above and beyond to ensure your total satisfaction, that we’ve put our lists of promises in writing, via our Guarantee.

At Longbridge, we look at our working relationship as just that – a partnership. You can tell your Loan Officer exactly what you’re looking for, and they’ll be happy to walk you through as many options as you wish. It’s all about addressing your personal needs and fostering a personal relationship.

4. How can a reverse mortgage be structured for my situation?

A major perk of the reverse mortgage program is its flexibility. As a borrower, you have three main options for how you may opt to receive your reverse mortgage funds – either a lump sum payment, line of credit, or monthly payout. Some borrowers also choose to receive their funds using a combination of these methods. This empowers you to create a distribution of funds that uniquely meets your retirement needs. And with a reverse mortgage, you’ll also have access to a “change of plan” feature. Should your needs change at any point during the life of the loan, you can contact servicing to change your payout distribution to a method that best suits your situation. There is a modest fee for doing so, but this can be rolled into the loan, so you don’t need to pay out-of-pocket.

Beyond payout and fund distribution methods, there are several other flexibilities of reverse mortgages that can make the loan truly tailored to your unique goals and situation. As a borrower, you have the option to establish a Life Expectancy Set-Aside (LESA), a pool of reverse mortgage proceeds intended to pay for property and insurance charges throughout the estimated life of the loan. Similar to an escrow on a traditional mortgage, a LESA is a one-time contribution of funds. Many borrowers appreciate this option for the peace-of-mind that comes with knowing financial obligations are met. The loan can also be structured for your situation when it comes to payments. As previously noted, with a reverse mortgage there are no required monthly mortgage payments¹. However, should you wish to make payments towards the loan balance, you have the flexibility do so at any time – without penalty or fee.

5. What discounts, promotions, or special pricing can you offer me?

In today’s environment of inflation, we could all look to save money wherever possible. And fortunately, in some cases, all you have to do is ask. At Longbridge, we offer an appraisal promo on loan applications – we cover the cost of the appraisal, which results in a savings of $1,000. We also offer a military discount in honor of those who’ve so proudly served our country. As a national lender, we have pricing power with our capital markets. As such, we try to give discounts off of the HUD origination fee and our default origination whenever possible.

At Longbridge, your Loan Officer will work with you to uncover any and all discounts you may qualify for. Even if you have a quote from another lender, you can bring it to your Longbridge Loan Officer and they’ll see what can be done to beat it or match it.

6. What are my consumer protections on a reverse mortgage?

While reverse mortgages have long battled a tarnished reputation stemming from practices in the 1980s – today’s reverse mortgages are fully monitored by the U.S. Department of Housing and Urban Development (HUD). As such, reverse mortgages are among the most regulated products available in the mortgage market. And as a consumer, there are plenty of protections in place to make sure the loan is safe and ethical for you. While your Loan Officer can discuss all of these in greater detail, we’d like to highlight a few of these safeguards.

The first of these safeguards is reverse mortgage counseling. Before formally submitting your application for a reverse mortgage, you’ll be required to meet with an independent third-party HUD-approved counselor to discuss the responsibilities that come with a reverse mortgage. The counseling session is meant to equip you with the education and resources to help you decide whether the reverse mortgage is right for you. Your counselor can provide guidance to help you make a well-informed decision and offer support throughout the application process. Another safeguard is that FHA-insured reverse mortgages are non-recourse loans. Simply stated, this protection means that you (or your heirs) will not owe more than the value of your home at the time of its sale. In the event that your loan balance exceeds your home’s appraised value, this excess amount is covered by federal mortgage insurance – the Mortgage Insurance Premium (MIP) that is paid over the course of the loan.

7. What documents should I expect to provide when applying for a reverse mortgage?

When it comes to applying for a reverse mortgage, like any other mortgage – you’ll first need to provide the required documentation. While the needed documentation will largely depend on your unique situation, you can expect to provide basic verification of your identity and income. In terms of what you’ll need to submit, for identification purposes you’ll be asked to provide a photo ID and your social security number, along with the declaration page of your homeowner’s insurance, and counseling certificate. If you have a mortgage on your home, you will also be asked to provide a mortgage statement.

In terms of income, you will need to provide proof of social security income, pension income, any VA benefits, employment or self-employment income, rental income, and IRA and/or 401(k) income. Your Loan Officer will also work with you to validate any checking and savings accounts, retirement accounts, and stocks or bonds you may have. When applying for a reverse mortgage, it’s important to first have a conversation with your Loan Officer to identify any additional documentation you may need to submit or any requirements that may not apply to your situation. For instance, when applicable, you may be required to submit a Homeowner’s Association statement, Trust Agreement, Solar Lease Agreement, and/or Power of Attorney. When underwriting the loan, it is not uncommon for underwriters to ask for additional verification or documentation, so the more you can provide upfront, the more expedited you can expect your loan review and overall process to be.

8. What are my consumer protections on a reverse mortgage?

The process to secure a reverse mortgage loan is made up of multiple steps. The first of these steps is deciding whether the loan is right for you and your unique situation. In this stage of the process, you will work closely with your Loan Officer to get all  your questions answered and evaluate any alternative options. You will then complete the required reverse mortgage counseling with a HUD-approved third-party counselor.

Once you’ve received counseling and provided your Loan Officer with a copy of your counseling certificate, you will submit your reverse mortgage application. This is where you will work with your Loan Officer to provide any necessary documentation to complete the loan.

The next step is to have a home appraisal. While the appraised value of your home will play a role in how much money you can receive from a reverse mortgage, the appraisal is also meant to ensure that your home meets HUD’s minimum property standards. At Longbridge, we order these services from an Appraisal Management Company (AMC) on your behalf.

Once your appraisal has been received, your loan will move into underwriting. The underwriting process is manually performed and reviewed by a live Direct Endorsement Underwriter to determine that all requirements have been met based on the submitted documentation.

Upon final approval from underwriting, your loan will be deemed “clear to close” and closing documents will be issued. Since these documents require your signature, Longbridge will assist you in scheduling a time for a signing assistant to meet you and review the file. You will also receive a full copy of the documents for your own personal records.

Finally, three business days after singing your closing documents, your funds will be disbursed, and any outstanding liens or existing mortgages will be satisfied from the loan proceeds².

While there are many steps to the reverse mortgage process, here at Longbridge, our goal is to close your loan within 45 days of receiving your application and counseling certificate – and we make every effort to close even sooner. We also offer our Fast Track program, designed to close loans within 30 days for even more expedited files. While turn-times can vary based on your unique situation and loan, we at Longbridge are committed to doing everything we can to make the process as seamless as possible. Your Loan Officer will provide regular updates at least once per week on the status of your loan.

9. What are my obligations once I close on a reverse mortgage? What happens if I move out, relocate to a full-time care facility, or pass away?

There are three main requirements you must fulfill with a reverse mortgage. First, you are required to keep up with property charges – including property taxes and insurance. Second, your home must be maintained and kept in good repair. Finally, you must live in the home as your primary residence. You will be required to sign an occupancy certification every year to certify this.

Should you choose to permanently move out of your home or relocate to a full-time care facility, your home would no longer be deemed your primary residence. As such, the reverse mortgage loan would be called due and payable. In this situation, many homeowners (or their heirs) choose to sell the home and use the proceeds to repay. Another option is to repay the reverse mortgage through a conventional forward mortgage. Remember, since reverse mortgages are non-recourse loans, you’ll never owe the lender more than the home is worth at the time of its sale.

A reverse mortgage loan is also deemed due and payable upon the passing of a borrower. However, if a co-borrower passes away, this does not force repayment of the loan. The surviving borrower can continue to own and live in the home – and enjoy all the benefits of the reverse mortgage.

10. Do you keep my loan after funding? Who do I contact should I need assistance?

In addition to being a reverse mortgage lender, Longbridge Financial is also a full loan servicer. This means you can expect a consistent relationship with Longbridge for the life of your loan. Our in-house servicing team can be contacted for any questions you may have – and are readily available to offer any assistance. We are also one of the few reverse mortgage lenders and servicers with a full servicing web portal for 24/7/365 access to your loan. For more information on our servicing capabilities, check out our website.