1. How to Prepare (The Document Checklist)
In your state, the single biggest factor in how fast your loan closes is preparation. The process typically takes 30 to 45 days, but incomplete documentation can delay closing by weeks. Before we submit your formal application, gathering these documents ensures a smooth, expedited underwriting process:
Pre-Application Document Checklist
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Identity & Age: Government-issued photo ID (Driver's License or Passport) and Social Security card. (One borrower must be 62+).
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Property & Ownership: Your current property tax bill, homeowners insurance declaration page, and a recent mortgage statement (if you have an existing loan to pay off).
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Financials (The Last 2 Months): Your most recent two months of bank statements (all pages, even if blank) and proof of income (Social Security award letters, pension statements, or tax returns).
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Living Trusts (If Applicable): If your home is held in a trust, we will need the full trust document and any amendments for lender review. Revocable living trusts are generally acceptable.
2. Transparency: What Are the Upfront Costs?
A major concern for seniors is out-of-pocket expenses. Transparency is critical. The vast majority of a reverse mortgage's closing costs are financed into the loan itself, meaning you do not pay them out of your checking account. However, there are two specific third-party services you pay for upfront:
Out-of-Pocket (Paid Upfront)
- 1. HUD Counseling ($125–$250): Paid directly to the independent non-profit counseling agency. (Some agencies offer a sliding scale).
- 2. FHA Property Appraisal ($450–$800): Paid directly to the third-party Appraisal Management Company. Costs vary by your state region.
Financed (Rolled into Loan)
- FHA Initial MIP: 2% of the home value (up to the $1,249,125 limit). This buys the non-recourse insurance.
- Origination Fee: Capped by federal law at $6,000 maximum, regardless of home value.
- Title & Escrow: Standard recording, title search, and notary fees.
3. After the Application
Once the HUD-approved counseling session is complete and the FHA appraisal is in, two steps remain before funds are released.
The Financial Assessment & LESA
Unlike a traditional mortgage that focuses heavily on income and credit, HECM underwriting focuses on your ability to maintain ongoing property charges. If your residual income or credit history suggests you might struggle to pay future taxes or insurance, the underwriter will mandate a Life Expectancy Set-Aside (LESA) — automatically setting aside loan proceeds to pay your taxes and insurance for you.
Closing & 3-Day Rescission
After reviewing your final Closing Disclosure (CD), a notary comes to your home to sign the final documents. Federal law mandates a 3-business-day Right of Rescission cooling-off period, during which you can cancel without penalty. Once it expires, any prior mortgage is paid off and your new funds are disbursed.
Credit & Money: Free National Resources
These are the same in every state and cost nothing. Use them before, during, or instead of a reverse mortgage conversation.
Find Your State’s Guide
Counseling agencies, the state regulator, and local housing and legal help all differ by state. Choose your state for the parts of the process that are specific to where you live, and see the HECM.cash FAQ for the questions homeowners ask most.