WHAT IS A REVERSE MORTGAGE?
A reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The loans are typically promoted to older homeowners and typically do not require monthly mortgage payments
5 requirements for a reverse mortgage
1. Own your home
2. Primary residence
3. 62 years old
4. No federal tax delinquency
5. Financial counseling
Reverse Mortgage Elgibility
To be eligible for a reverse mortgage, you must meet the following criteria, at a minimum:
- You must be 62 years or older.
- You must have enough equity in your home – about 50%, but the required amount varies by lender.
- You must attend a counseling session from a Department of Housing and Urban Development-approved counselor to learn more about the loan and your options.
- You must go through a financial assessment to ensure you are in the best position to be successful with your loan.
Along with these requirements, your home also needs to qualify for the loan. Here are a few basic requirements:
- The home must be your primary residence.
- The home must be in good condition and meet FHA standards.
- If the home is a condo, it must be on the HUD/FHA approved condo list. If it is not, you may still be eligible for a proprietary reverse mortgage.
A reverse mortgage works by using a portion of your home equity to first pay off your existing mortgage on the home – that is, if you still have a mortgage balance. After paying off your existing mortgage, your reverse mortgage lender will pay you any remaining proceeds from your new loan
Reverse Mortgage Benefits
- You remain the owner of your home.
- There are no monthly mortgage payments required from you.
- You are protected if the housing market declines.
- You may choose from several options of disbursement.