Reverse Mortgage Requirements
As a homeowner of a particular age, the bulk of your net worth is contained in the value of your home. If you at a point in time you are cash-strapped or need extra cash for an enjoyable retirement, you should consider a reverse mortgage as an option for a financially secured future.
The reverse mortgage is a type of option that gives you the privilege to “eat your cake and have it too” until the last bite that repayment becomes mandatory and required. However, you should consider the reverse mortgage requirements explained below to decide if you could give it a trial.
Reverse Mortgage Age Requirements
To be qualified for a reverse mortgage, you must be 62 years of age or older. Your age will also determine how much you can borrow. If you are younger, you will get less amount; and if older, you will get more fund. And if you are applying with your younger spouse, the age of your spouse will be used to determine how much you can draw.
Possession Status Requirements
You should either own the house outright or have little outstanding mortgage balance which can be paid off with the money from the reverse mortgage. Besides, you hold title to the home and occupy the house as your primary residence. Even if you own a house outright but you have not occupied it for 12 consecutive months maybe because you have been living in a nursing home, you will not be eligible.
Reverse Mortgage Type of Home Requirements
The kind of home that can qualify for a reverse mortgage includes a single-unit home; a two-to-four-unit property provided you live in one of the units and rent out the others, and a condominium that is approved by the Department of Housing and Urban Development (HUD).
4.Your Financial Status
You do not necessarily need any income to be eligible for this loan since you will not be required to make any payments on a reverse mortgage. However, certain costs such as origination fees and closing costs are involved, but the can be rolled into the loan if you cannot pay for them out-of-pocket. But your ability and willingness to pay property taxes and insurance, and maintain the home is necessary when considering your eligibility.
- Need for Counseling
The federal government stipulates that you must go for mortgage counseling before you can get a reverse mortgage. During the counseling, you will be enlightened about everything you need to know about the reverse mortgage. Other options through which you can meet your financial needs will be explained to you.
The Younger Spouse Scenario
Due to the requirement that the applicants for a reverse mortgage must be at least 62 years of age, you are still eligible even if your spouse is younger than 62 years old. However, the proceeds you can draw will be based on the age of the younger spouse, but the 2014 HUD rules provide a deferral period preventing the widow or widower from losing the home when the mortgage becomes due as a result of the demise of the principal borrower.
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