Qualify for a Reverse Mortgage
- People age 62 need 50% equity to qualify for a reverse mortgage.
- FHA reverse mortgages are popular and contain many rules protecting homeowners.
- Take your time when deciding if a reverse mortgage is right for you.
I am 62 years old and need to know if I qualify for a reverse mortgage.
I need to know if I qualify for a reverse mortgage. I am 62 years of age.
Reverse mortgages are a good option for many homeowners who have owned their homes for a long time. You may be in a good position to take advantage of a reverse mortgage if you have the available equity in your home. You mentioned you are age 62. At 62, you will need at least 50% equity -- meaning that any existing mortgage balances on your home cannot be more than half of your current property value.
Since you are right at the low end of the age eligibility, lenders will be more restrictive in the size of the loan that they will qualify you for. As a next step, complete the Bills.com quick reverse mortgage form and find some of the best lenders in the business, who will be screened based on your specific situation.
Qualify For Reverse Mortgage
Reverse mortgages are available to homeowners 62 years old or older. Neither income nor credit history is considered by lenders in determining who qualifies, which is another big benefit of a reverse mortgage. Since no payments are required by the borrower, the ability to pay back the loan does not matter. Rather, the most important qualification criteria for a lender are the age of the homeowner, the value of the home and the amount of available equity in the home.
For many older homeowners who have lived in their home for a long time and have been responsible with their debt and refinancing, there is enough equity in the home to make a reverse mortgage a very attractive option. Most property types are eligible, though some cooperatives are not -- most importantly, you can only get one on your primary residence.
Reverse Mortgage Overview
A reverse mortgage is a unique mortgage because they are no payments required from the borrower. Instead the homeowner receives cash from the lender and in turn, the lender receives a portion of the homeowner's equity. A reverse mortgage loan is designed to give older homeowners the ability to receive tax-free income without having to make payments, sell their home or affect their hold on their title. For older homeowners, a reverse mortgage can be the right way to receive either extra income or security in retirement.
The loan is repaid when the borrower ceases to live in the home; this can be a result of the homeowner selling the home, moving out (and it is no longer their primary residence), or passing away. In any of these cases, the lender receives the proceeds of the sale of the home to pay off the balance of the reverse mortgage loan. If the proceeds of the sale exceed the outstanding loan balance, the difference is paid back to the borrower or to their estate.
Another unique aspect of the reverse mortgage is the counseling required for all prospective borrowers considering a reverse mortgage loan. All lenders are required by law to provide this counseling to insure that the homeowner is aware of all the terms and conditions of the loan, and that they and their support group has closely considered whether or not a reverse mortgage loan is right for them.
Reverse mortgages can be taken either as a line of credit or as a lump sum. There are actually more options to consider, but your reverse mortgage lender will be able to talk you through all of these options. As a prospective borrower, you should first consider how you will use the proceeds and whether it makes sense to receive the cash over time or all at once.
The reverse mortgage industry is heavily supported by HUD (US Department of Housing and Urban Development) and the heavy majority of reverse mortgage loans are insured by HUD's Federal Housing Administration (FHA). The FHA product, called the Home Equity Conversion Mortgage, or HECM, is the dominant product in the market and the support that the FHA provided to the reverse mortgage market is another benefit for potential borrowers. The FHA provides heavy oversight and regulation, and the absence of private reverse mortgage products has kept the costs and overall expense of reverse mortgages in reasonable check.
However, fees on a reverse mortgage are generally higher than traditional mortgages, and therefore, you want to make sure that you will be in your home for at least a few years to avoid throwing away money on a loan on which you will never realize the benefits.
What Should I Do Next?
Find reputable reverse mortgage lenders -- Bills.com has put together a network of the most reputable reverse mortgage lenders in the country and you can access them through this quick reverse mortgage form. Also, be sure to continue your research and take advantages of this additional reverse mortgage information on Bills.com:
I hope this information helps you Find. Learn & Save.