Do I Qualify For a Reverse Mortgage?
- At least one borrower must be 62 years or older. The other borrower can be under 62.
- You own the home (can have existing mortgage).
- Must have sufficient equity in the home to cover any existing liens/mortgages (explained in detail below).
- Home must be your primary residence (you have to live in the home for a minimum of 183 days out of the year).
- Never have defaulted on any Government debt (seniors who have defaulted on any government insured debts will not qualify).
- If you have existing mortgage the reverse loan will pay it off so you need to have enough equity available for this to happen.
- Ability to pay for maintenance, home insurance, and taxes. New financial review will be a requirement starting on March 2nd, this will review credit/income/assets.
- Mobile homes reverse mortgage (also qualify but more restrictions apply).
- No income or credit scores are formally needed. No need to show proof of income or assets at the current moment.
- No medical requirements are in place at this time.
Update: March 2nd, 2015 Financial Assessment Becomes a Reality.
Are you a senior considering the reverse mortgage loan? If you happen to have bad credit, low income or no income, and very little in terms of assets you want to consider doing a reverse mortgage now before these laws take effect on March 2nd. Financial assessment is something HUD has talked about since 2013, and the laws are finally going into effect very soon.
Starting on March 2nd, lenders will have to review your finances in order to qualify the reverse mortgage loan. This includes evaluating your income sources, credit history, and reviewing your assets. Many seniors with limited or poor credit/income/assets will not qualify going forward.
The changes to the program are being implemented to reduce the number of defaults. Many seniors who could not afford to maintain the home (property taxes/insurance/maintenance) took one out to find later out that they could loose the home if they don’t keep up with the maintenance bills. Overall these changes are positive but if you are a senior who is on the fence and is not confident on the qualifiers above, we recommend you get a free no obligation quote now before time runs out.
typical credit issues:
Over utilization of credit
Too much debt compared to income (DTI debt to income)
Past due taxes
Borrowers must be at least 62 years of age (if you are 60 days from your 62nd birthday you can start the process).
Non-borrowing spouse can be under 62 years of age as long as the other borrower is over 62. The amount of funds available is based on the age of the younger borrower. The older one is, the more equity is available under the HECM reverse mortgage.
The reverse mortgage becomes due and payable once both borrowers have passed, decide to move, and or sell the home.
Equity needs to be available in your home for you to qualify. Equity can be calculated by taking the value of the home minus any outstanding debts/liens/tax liens against the home.
Simple example: if your home is worth $200,000 but you currently have a mortgage of $50,000 then you have $150,000 available in equity. The more equity you have available in your home, the better off you are financially. Having a substantial amount of equity locked into a home is not the best financial retirement strategy, and you should consult with a fee only financial adviser to review your options for that equity. Many financial advisers are now coming around to the idea of using the reverse mortgage to free up some of that equity while not having any new mortgage payments to be made.
This must be your primary residence for you to qualify, this means you must live in the home for at-least 183 days out of the year.
If you are trying to take a reverse mortgage on a second home or investment home, you will not be able to qualify for the HECM reverse.
Second or investment properties will not qualify for this loan option unfortunately. FHA insures the loans and wants to make sure that the loan is available for those seniors who have a need to access the equity without being burdened by a monthly mortgage payment.
NEVER DEFAULTED GOVERNMENT DEBT
In order to be eligible for the reverse mortgage, you cannot have made any late payments or be in default with any government debts/liens/taxes. One example is government sponsored student loans. If you co-sign for a grandchild to take these out and they default you may revoke your eligibility for the HECM program.
Part of the process of the reverse mortgage loan is to attend a HUD counseling session and the property has to be appraised by a third party appraisal management company.
If you meet the qualifications above and are interested in borrowing the maximum allowed for your home with a fixed rate lump sum (HECM Standard) please note that on April 1st 2013 there wont be this option (FHA has eliminated this program and it will take effect on 4/1/2013) – those interested need to act now and get a free HECM reverse quote.
I need help making sure I qualify for the HECM reverse mortgage loan program
No problem – we can assist you to customized the information to answer you questions – if you have time read the following to be familiar with these definitions or give us a call to see if you can qualify into the Home Equity Conversion Program 888-975-1367.
What is equity? Equity is the current market value of a home minus the outstanding mortgage balances. Simple to calculate but it is very important in order to qualify for any mortgage loan including the HECM reverse mortgage – simply take the value of your home and subtract any outstanding debts from it (including mortgages/second mortgages/tax liens). To find out the value of your home we recommend you visit: Zillow.com
What if my spouse is not yet 62 years of age? You have to make a decision based on your health, the expected amount of equity available, how badly you need the funds, and if your spouse has a good chance of making it to 62 as well before you pass (this should not be an issue if spouse is 59 and healthy as life expectancy is well into the 70’s). The safe call is to pass on the reverse mortgage and wait until they are 62 as if anything happens to you while you are waiting the loan would come due – the decision is ours though.
Will my investment home or second home qualify? No, unfortunately you will not be able to take out a reverse mortgage then – it has to be your primary residence. Also you have to live in this home – for at-least 183 days out of the year.
If you meet the qualifications above you will be able to either pay off any existing mortgages or release equity from your home to retire. Seniors across the nation have been taking advantage of the low market rates – and incentive from lenders including a no fee reverse mortgage.
If your home is appraised for more than $625,000 and you need access to more funds than allowed by the HECM program visit our page on jumbo reverse mortgage page.
*On October 5ht 2011, HUD approved the ability for lenders to do financial underwriting which will allow banks/lenders to review your financial health (your income and credit scores can now be taken into consideration for you to qualify for the HECM reverse).
“We are proud of being one of the only websites which is still working to find reverse mortgages for those seniors who don’t have perfect income/credit/equity. They can still qualify without showing proof of income or credit with our approved lenders.”
HECM Reverse Mortgage- Seniors who are in or near retirement are faced with tremendous financial challenges including a global recession, higher costs for food/healthcare, lower income, higher inflation, and uncertainty in both the real estate market and also the performance of the stock market’s.
This is really the perfect storm in the economy, we have recently learned that the social security funds will not be around for much longer (government reports predict by 2017 some of the funds will be dry), and that there is a high chance properties values will decrease with the next wave of foreclosures (no one knows for sure so don’t worry too much). In certain markets this is sure to happen, do a basic search to see how many foreclosure properties are in the process in Florida or California, a very large % of homes are in this position.
Looking long term (7-20 years from now) home prices can go back up to previous levels, so can interest rates as we leave the recession, and stocks usually perform better when coming out of a recession. This means that realistically those who are looking for a short term fix can also tap into their equity now (HECM Saver is a good option), as with home prices increasing the costs of the reverse mortgage loan would have been offset (so the money was taken out a 4.5% and homes increased at 5% you will break even every year – and technically keep the same % of equity in your home).
“Seniors who qualify for a reverse mortgage loan are told to comparison shop them now instead of waiting since there are changes coming to who can qualify and also how much you can receive with a reverse mortgage loan. ”
Last year alone some 100,000 seniors received the federally insured reverse mortgage loan, and this year we are predicting even more will get this loan since it has so many features
Another way to phrase this question is to ask who is not going to be able to qualify and the biggest challenge in this current economy is the home’s equity value. The value of the property is currently a challenge since home values have gone down such much in value of the years. The only way to overcome the valuation of the home is to be able to pay down the current mortgage or wait many years until values go back up.
“If legislation passes to allow lenders to do financial underwriting it will become very hard for many seniors to qualify since income and credit can be a part of the reverse qualification, with this in mind and possibility of tougher requirements seniors need to make a decision (right now rates are at all time lows, borrowing costs are very low, HECM saver reduces mortgage insurance, and it is easy to qualify).”