How long does a reverse mortgage take to close? Can it be completed in a month or less?
We have had many reverse mortgage closings completed within 30 days, but I have to be honest with you: all the stars have to align just right, or it will not close in the 30 days, especially at this time of the year. Let me explain…
Every borrower has to have the HUD mandated counseling before we can do much with their loan, and many states also have counseling requirements. If your counseling has not been completed, you have to get an appointment, which is sometimes easier to do than others.
Right after HUD announced that they would change the program in 9/2017, counseling agencies were jammed and appointments were harder to get. It is much easier to get an appointment now, but in some states, there are other requirements, such as no application until after the counseling or, as in California, a 7-day cooling-off period when the lender can do nothing on loan.
That means if you live in California or one of these other states. It takes just 2 days to get an appointment; you are dead in the water until after you receive the counseling, and in California, that’s 9 days into that 30-day time frame already, and the lender has not been able to start the loan by law.
Your Location Matters
Then, the location can also work against you with other services. Some parts of the country are notorious for taking incredibly long on appraisals. Washington, Oregon, and Colorado fall into these categories.
It can take 4 weeks to get an appraisal back. Or if you live anywhere you are considered rural, or there are few FHA-approved appraisers in the area or very few recent sales of similar homes, it can take appraisers just as long in other states as well.
Then you have to consider the time of year. We have holidays and vacations with which to contend, and even if there is no one out at the lender’s shop, we work with appraisers, title companies, escrow, attorneys, and other third-party services that may have staff out at their shops that affect their service levels this time of the year.
We just came out of Hurricane season and were significantly impacted by two massive hurricanes and the many wildfires throughout the western United States.
Even if you don’t live in an area affected by the disasters, lenders and other service providers are bogged down by loans having to be reviewed, re-reviewed, and held up just before closing.
The normal flow of things is interrupted at such times, and it taxes the staff when they have to work on each loan two, three, or even four more times, which slows down their ability to handle the same volumes.
Reverse Mortgages can close in 30 days.
And finally, through it all, when the pieces fall into place (the borrower does have their counseling already done, they return their signed application without delay, and the service providers hit no delays), we have loans that close in less than 30 days quite often.
The problem is we can’t tell you which loans in advance will be those lucky loans. We never know when an old lien will show up on your title that might take a while to track down the lender and remove, when the appraiser will call us and tell us that they can’t find any sales and it is “going to take a while,” when HUD will suddenly make an unannounced change that sends the entire industry into a frenzy (as it did in September of this year) or when a natural disaster will strike.
Therefore, I always like to be honest with folks and tell them that yes, the loan can close in 30 days, and many do, but you are better off planning for 45. Even then, if some unforeseen circumstances arise that delay your title or appraisal, it could take longer.
If 30 days is a drop dead date before something catastrophic happens, I would advise a Plan “B.”