Generally, to be qualified for a reverse mortgage loan, the youngest homeowner has to be 62 years of age or older and have adequate home equity. Also, you have to meet financial eligibility guidelines as set up by HUD.
Deciding whether there’s adequate equity in the house or not includes an FHA calculation which takes into consideration:
* Present interest rate
* Whether the rate is going to be fixed or variable
* Youngest homeowner’s age
* FHA lending limitations
* Appraised home’s value
You might have to set aside extra money from loan proceeds in order to pay for insurance and taxes.
If the homeowner isn’t 62, yet they’re permanently disabled, are they eligible?
No. The Federal Housing Administration uses age as a guideline to decide eligibility for reverse mortgages and will make no exceptions for Social Security or disability status
Can somebody be eligible if they have a mortgage?
Absolutely, as long as they have adequate equity. Most homeowners who take out reverse mortgages use them to pay off the existing mortgage, so they can stop making month-to-month mortgage payments.
Do all people age 62 who own their house qualify?
No. A few homeowners who wish to obtain a reverse mortgage loan aren’t qualified because they do not have an adequate amount of equity built up within their house. Additionally, some kinds of homes aren’t eligible, and a borrower also must meet financial eligibility guidelines, as set up by HUD.
What will happen if there is not enough home equity to be eligible?
It’s referred to as a “shortfall.” It means that a reverse mortgage wouldn’t offer enough funds to pay off the existing mortgage on the home — it’s coming up “short.” Within this situation, a few homeowners might opt to make up for the difference by paying down the balance of the mortgage by the quantity of the shortfall, so they can be eligible for a reverse mortgage. But, many people do not have enough funds to do this.
Counseling Process
HUD will certify housing counselors all around the country to offer homeowners impartial information on reverse mortgages. Reverse mortgage loan counseling includes a mandatory portion of the application process and typically is completed right after finishing a reverse mortgage application.
Reverse mortgage counseling may be performed over the phone or may be achieved one-on-one with an agency in your region.
After your counseling session, your counselor will mail a signed HECM Counseling Certificate copy to a homeowner.
For more information on our reverse mortgage loan, contact Longbridge Financial today.
