HOW tO QUALIFY FOR A REVERSE MORTGAGE?
REVERSE MORTGAGE REQUIREMENTS – ELIGIBILITY AND QUALIFICATIONS
If you want to obtain a reverse mortgage, the lender expects you to meet certain qualifications. Here is all detailed information on each requirement you must meet to be eligible to get a reverse mortgage.
Note that these requirements focus on equity conversion mortgages (HECMs). Requirements for proprietary reverse mortgages and single-purpose reverse mortgages may differ.
Read these and know if it is worth your time applying for this loan:
Reverse Mortgage Requirements
If you are a homeowner and meet the reverse mortgage age requirement of 62 years, you could qualify for the federally-insured Home Equity Conversion Mortgage (HECM) program.
Age of the borrowers also determines how much you can obtain on a reverse mortgage. The older you are, the more amount of money you obtain.
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It is mandated by the federal government that the borrower must go through mortgage counseling before getting a reverse mortgage. Counselors thoroughly advise and guide borrowers on the costs and consequences that go in a HECM. They also advise borrowers on how to take the reverse mortgage proceeds.
According to the Federal Trade Commission, the current rate for mortgage counseling is approximately $125. Borrowers who can’t afford the counseling fee can find a reverse mortgage counselor who is willing to do it at a reduced rate or even free.
Remember that mortgage counseling is compulsory, even if you think that you are well-versed in this subject. It protects borrowers from uninformed and wrong financial decisions that may prove inappropriate for them in the long-term. You can choose counseling by phone, available in most states. This is a great, less expensive and most convenient option.
What If Your Spouse Is Under 62?
When you are taking out a reverse mortgage, both you and your spouse must be on the contract, even if one of you is below 62. The older spouse is the borrower, while the age of younger borrower is also considered in determining the loan proceeds.
As of HUD’s new rule developed in August 2014, if a couple with a spouse below 62 wants to take reverse mortgage, they can list the younger spouse as a non-borrowing spouse. If the older spouse passes away, the non-borrowing spouse may reside in the home, if the surviving spouse proves his legal right on the house within 90 days. S/he may continue to meet all requirements of a reverse mortgage holder, such as paying property taxes and insurance premiums.
For example, if Bob is 67 and his wife Sue is 60, Bob qualifies as the primary borrower. Both should be on the contract so that Sue can occupy the house if unfortunately Bob dies.
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¹ Senior Housing Wealth Reaches Record $7.14 Trillion. NRMLA. Historical RMMI.