You must own your home outright or have a low mortgage balance. Being a full owner of your home means that you no longer have a mortgage on it. Reverse mortgages have two main qualifying criteria: you must be at least 62 years old and you must have a significant amount of equity in your home. While the specific percentage of capital required varies from lender to lender, you'll usually need at least 50%.
There are no credit rating or income requirements for reverse mortgages. To qualify for a reverse mortgage, you must be a full owner of your primary residence or have at least 50% equity in your home. This means that you must have paid your conventional mortgage in full or have a low mortgage balance. The capital you have accumulated in your home is the security of the reverse mortgage.
Vacation homes or secondary homes are not approved under the requirements of the reverse mortgage because they are not considered the owner's primary residence. A conversion mortgage with home equity (HECM), also known as a government-insured reverse mortgage loan, is an excellent tool to help you use the capital in your home and convert some of it into cash. The Department of Housing and Urban Development (HUD) requires that all prospective reverse mortgage borrowers complete a HUD-approved counseling session, and borrowers must pay an opening fee and a mortgage insurance premium in advance. If your reverse mortgage application has been denied, you should find out what disqualifies you from getting a reverse mortgage.
These requirements and requirements for a reverse mortgage may seem overwhelming, but don't let that stop you from submitting an application. In addition to finance, there are also a number of requirements related to housing that all applicants must meet in order to obtain a reverse mortgage. The counselor will explain how a reverse mortgage could affect your eligibility for Medicaid and Supplemental Security Income (SSI), and will also discuss the different ways in which you can receive the income from your reverse mortgage. The new rules allowed reverse mortgage lenders to perform a financial evaluation of borrowers to review income, cash flows and credit reports before approving a reverse mortgage application.
If you don't own your home outright, you should have a mortgage balance low enough to be able to pay off the proceeds from the reverse mortgage loan. Reverse mortgages are designed to allow older homeowners to take advantage of the capital they have accumulated over years of mortgage payments. If you have a history of late or outstanding payments on credit card accounts, mortgages, or other loans, this may affect your eligibility for the reverse mortgage.