4 Things You Need to be Eligible for a Reverse Mortgage

Many seniors in the United states are taking advantage of a relatively new way to increase their retirement income. This new program takes the equity you have built in your house over the years of paying your mortgage and turns that into retirement income. This new program is called a reverse mortgage. In a simplified explanation a reverse mortgage changes the equity of a borrower’s home into liquid attainable proceeds. The way to access that money comes in several different ways and is not covered in the scope of this article. So the first question that should be asked is, do I qualify for this program? Listed below are the 4 criteria potential borrowers have to pass to be eligible for qualification of a reverse mortgage.

1. Potential borrowers must be at least 62 years old. If you are married and both spouses are on the title of the property both of you have to be over 62. You can't average the age to qualify so if one spouse is 68 and on is 60 you can't be on the reverse mortgage. The age of the borrower is a critical factor in how large the loan can be. The amount of money you receive is based on your life expectancy so the older you are the more money you can receive. If you are both 62 you will qualify for the smallest amount of money because the lender will expect you to be getting it for a long period of time.

2. Borrowers must actually own the home and use it as their primary residence. You must live in the house for at least 6 months of the year. there are now programs for second homes but the amount of money is going to be less because the risk to the lender is more. These reverse mortgages are called proprietary since they aren't insured by HUD. Certain types of homes are ineligible; they include some manufactured homes, cooperatives and most mobile homes. The condition of the home and where it is located can also affect the reverse mortgage qualification.

3. The Department of Housing and Urban Development (HUD) has some basic property standards that have to be met in order to qualify for a reverse mortgage. For instance you need to have a well that is separate of the foundation of the house. Deferred maintenance (things that need to be fixed on the house like windows, siding, or shingles) has to be fixed before closing or the money from the closing must get the work done.

4. The last requirement is that you take the time to discuss a reverse mortgage with a HUD approved counselor. This counselor is supposed to be a non biased individual that can discuss the reverse mortgage, answer any questions you have, and give you other options. For instance if you need a reverse mortgage for paying property taxes many states have a program to help out low income families pay for them. There are a lot of government programs available which may help ease your financial troubles other than a reverse mortgage.

If you think a reverse mortgage is the best option for you counseling needs to be done before you can even get an approval for a reverse mortgage. The reverse mortgage amount will be determined by the age of the youngest borrower, current interest rates, and the appraised value of your home or FHA lending limits. Typically, high age, low interest rates, and high home value will mean a larger loan that you can get. The higher the loan amount the more cash you have access too. Remember that the reverse mortgage has to be in the first lien position so if you have a current mortgage, it must be paid off with loan proceeds.

The best part about a reverse mortgage is that it does not have to be repaid as long as the borrower still occupies the home as their primary residence. When the home is sold, the mortgage lender will receive the principal of the loan as well as any interest accrued. Any remaining funds will go to the borrower or their survivors, but it is important to note that borrowers will never owe more than the value of the home. This has been an explanation of the 4 qualifications of obtaining a reverse mortgage. if you feel you need more information got ot my website at http://dangersofreversemortgages.com