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4 reverse mortgage loan documents
When you apply for a reverse mortgage loan, you will need to provide some documentation. A reverse mortgage loan is a loan, after all, and any loan against your home’s equity will require some paperwork.
Here we offer details on the documentation you’ll likely have to provide:
- Valid identification.
- Verification that the property is your principal address.
- Proof of income so you have enough money to pay property taxes and homeowners insurance.
- Certificate that you have undergone reverse mortgage loan counseling.
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The first and most basic piece of information that the reverse mortgage loan lender needs is a valid identification that shows how old you are. To get a reverse mortgage loan, you must be at least 62 years old.
In most cases, a current driver’s license is sufficient, according to reverse mortgage loan lending professionals.
In addition to proving that you’re old enough to get a reverse mortgage loan, this requirement helps the lender abide by “know your customer” rules.
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Verification of principal address
AA reverse mortgage loan is available only on your principal home. That means that, if you own more than one home, you can get only one reverse mortgage loan, and it has to be your principal residence.
The U.S. Department of Housing and Urban Development (HUD) defines “principal residence” simply: “A principal residence is a property that will be occupied by the borrower for the majority of the calendar year.”
Typically, the address on your driver’s license is the same as your principal address. If you don’t have a driver’s license, or if it doesn’t reflect your principal address, then the lender might ask for other documentation, such as tax records, bank statements or voter registration.
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The lender wants to make sure that you have income to maintain your home and pay the taxes and homeowners insurance premiums.
From a lender’s perspective, you have many potential sources of income. Maybe you have a job, full-time or part-time. Maybe you own a small business. Maybe you collect Social Security retirement income. Maybe you draw pension income, or you have required minimum distributions from retirement accounts.
The documentation to prove your income depends on the type.
“The details of those things are going to be specific to your loan,” says Paul Fiore, executive vice president of sales for reverse mortgage loan lender American Advisors Group, or AAG.
You might provide copies of your W2s, or paycheck stubs, or a Social Security award letter, or statements from your bank or the administrators of your retirement accounts.
If you don’t have enough income to pay property taxes and homeowner’s insurance, you still might be eligible for a reverse mortgage loan. The lender would structure the loan with a “set aside” to pay those costs.
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Before the lender can close on your reverse mortgage loan, you are required to undergo counseling from an agency certified by the U.S. Department of Housing and Urban Development.
Reverse mortgage loan counseling “assures that they have done their diligence on the front side and they understand the program and what they’re actually signing up for,” Fiore says.
The counseling can be done face to face or by phone. Most people do it over the phone. The reverse mortgage loan lender will provide a list of independent agencies that offer counseling, or you can find a list of counseling agencies on HUD’s website.
After you have completed the counseling, you will get a certificate. The reverse mortgage loan lender will need a copy.
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