How long does a reverse mortgage take to close?  Can it be completed in a month or less?

How Long Does a Reverse Mortgage Take to Close?

Reverse Mortgages can close in 30 days.

Closing a reverse mortgage within 30 days is achievable, particularly when all the necessary elements align perfectly.  This ideal scenario includes the borrower completing their mandatory counseling, promptly returning the signed application, and experiencing no delays from service providers.

However, predicting which loans will enjoy this smooth and swift process is challenging.  Unforeseen complications can arise at any stage.  Issues like unexpected liens appearing on a title, appraisers struggling to find comparable sales, sudden industry-wide changes triggered by HUD, or disruptions due to natural disasters are all variables that can extend the timeline.

Given these potential uncertainties, a more pragmatic approach involves setting realistic expectations.  While many loans can and do close in 30 days, borrowers should plan for a 45-day process.  This timeframe allows some cushion for unexpected delays related to title issues, appraisals, or other unforeseen circumstances.

For those who face a critical deadline where 30 days is the absolute limit, it’s crucial to have an alternative plan in place.  Relying solely on the 30-day window without considering potential delays could lead

to significant challenges if unexpected issues arise.  Thus, having a Plan “B” is a wise strategy to mitigate the risks associated with tight deadlines in the reverse mortgage process.  This approach ensures borrowers are prepared for any eventuality, enhancing their ability to navigate the process with confidence and peace of mind.

Navigating the reverse mortgage process involves understanding the pivotal role of HUD-mandated counseling.  Every borrower must take this step before significant progress can be made with their loan application.  Additionally, various states impose their own counseling requirements, which can further impact the timeline.

The demand for counseling appointments can fluctuate.  For instance, following HUD’s program changes in September 2017, there was a significant surge in demand, making it challenging to secure appointments.  While obtaining appointments has become more manageable since then, borrowers in certain states may face additional hurdles.  These include mandatory waiting periods post-counseling before loan application submission, as in California, where a 7-day cooling-off period is enforced.

For residents of California and similar states, even a quick 2-day appointment scheduling means a significant waiting period before the loan process can officially commence.  In California, this can translate to a 9-day delay within a typical 30-day process timeline, during which lenders are legally prohibited from starting the loan.  Understanding these specific state regulations and planning accordingly is crucial for a smooth reverse mortgage journey.

Geographical Influences on the Reverse Mortgage Process

The impact of your geographical location on the reverse mortgage process can be significant.  Certain areas, such as Washington, Oregon, and Colorado, are known for prolonged appraisal times, often extending up to four weeks.  Rural areas or those with a scarcity of FHA-approved appraisers or limited recent comparable home sales can face similar delays.

Beyond location, the time of year plays a crucial role.  Holidays and vacation periods can affect the operational capacity of various involved parties, including appraisers, title companies, escrow services, attorneys, and other third-party entities.  These seasonal variations can substantially influence service levels and processing times.

Recent experiences, such as the aftermath of major hurricanes and widespread wildfires across the western United States, have also demonstrated how external events can disrupt the mortgage process.  These disasters directly affect the areas hit and place additional burdens on lenders and service providers nationwide.  Loans in the final stages of processing often require additional reviews or are put on hold, leading to a domino effect that hampers the usual workflow.

This compounded pressure on staff, who may need to revisit each loan multiple times, inevitably slows down their capacity to manage their usual volume of work.  Understanding these geographical and temporal factors is essential for borrowers to realistically anticipate and navigate the timelines of their reverse mortgage applications.

Timeline FAQs

Q.

How long does it take from application to closing for a reverse mortgage?

There’s no standard timeframe for reverse mortgages.  Some loans can be completed in less than 30 days, while others may take much longer.  If you’ve already completed your counseling and are quick to provide the lender with all requested documents, and there are no issues with your home or title, the process can be as swift as any other loan.  The lender must obtain a title report, an appraisal, and your documentation, underwrite the loan, and then close it.  However, specific states, like California, have mandatory waiting periods between your counseling session and when the loan processing can begin.  Additionally, unforeseen title issues, such as unresolved old loans never adequately discharged, can cause delays.  These issues could affect any loan, not just reverse mortgages.  A general expectation is around 45 days, but it can be shorter if you’re organized and there are no unexpected delays or longer if complications arise.
Q.

How long does the counseling take?

The amount of time it takes to complete the counseling will vary depending on the chosen counselor and the availability of the borrower.  A counseling appointment can usually be made within 24-48 hours with many counselors, but there will be other counseling agencies that are busier than others and, therefore, will have more delays in getting a counseling appointment scheduled.  The counseling appointment is about 60-90 minutes and can be done over the phone in almost all states if the customer prefers it.
Q.

How long does the appraisal take?

The time it takes to complete an appraisal will vary widely depending on the local real estate market, property type and location, appraiser availability, and borrower availability.  A local market experiencing significant home sales activity will be in greater demand for appraisal services, and therefore, appraisal timeframes will be longer during more activity.  Additionally, the more rural the property is, the longer the timeframe will be.  Those homes are more difficult to appraise and find comps for, and usually, fewer appraisers are servicing those areas.
Q.

How long does it take to approve a reverse mortgage?

A HUD-endorsed Underwriter can approve a reverse mortgage loan once the appraisal is completed.  This timeframe will vary from market to market, but once the appraisal is in, the processing team can submit the file to Underwriting to receive the loan approval.
Q.

How long does it take to receive money from my reverse mortgage?

The time to receive money from the reverse mortgage will depend on when the funds are requested.  For example, any funds being disbursed at the time of loan closing will be sent by the Title company as soon as the loan has been funded and recorded, usually 24-48 hours if the borrower requests a wire.  Line of credit advances after closing can take up to 5 days to be disbursed by the servicing department.

Also See: 
5-Step Guide to the Reverse Mortgage Loan Process