Wondering if you meet the qualifications for a reverse mortgage?

Thanks to reverse mortgages, many senior homeowners have been able to make home improvements, travel, pay off medical expenses, or supplement their income by tapping into their home equity. Reverse mortgages have become much safer, more accessible, and more popular thanks to the current Federal Housing Administration (FHA) rules.

There are several different reverse mortgage programs, which vary based on how you choose to receive your funds (one lump sum, monthly payments, or a line of credit), the value of the home, and how the loan is insured. Qualifications for reverse mortgages differ based on the program that is optimal for your situation.

The FHA-insured reverse mortgage or Home Equity Conversion Mortgage (HECM) is the most common reverse mortgage and comes with specific application requirements, including:

Age Requirement

Since reverse mortgages are for seniors, at least one of the borrowers must be 62 or older to qualify for the HECM program. If you or your spouse is not 62 years or older, the younger spouse can be considered a non-borrowing spouse on the loan. The spouse who is not at least 62 can remain in the house after the death of the spouse who is 62 years or older, but they will not have access to the related funds. A younger spouse could also affect the amount of funds available to you.

Home Ownership

When qualifying for a reverse mortgage, you must own the home outright or have substantial home equity. Even if you have an existing mortgage, qualifying for a reverse mortgage may still be possible if your equity is 60% or more. The reverse mortgage would pay off your mortgage and any other property liens before issuing any additional available funds to you.

You must live in the home as your primary residence. Though you may own other homes, vacation homes are ineligible for reverse mortgages. Multi-unit homes may be eligible if you live in one of the units. Some manufactured homes, condominiums, and townhouses may be eligible if they meet HUD requirements. Ultimately, to decide if your home meets the qualifications for a reverse mortgage, an appraisal will need to take place.

Financial Requirements

The borrower(s) must meet with a HUD-approved reverse mortgage counselor before applying for a reverse mortgage loan. The session is to ensure that the borrower comprehends the reverse mortgage process and understands the loan terms and the associated costs.

One of the qualifications for a reverse mortgage is that the borrower must show that they have the ability and are willing to meet loan obligations, including upkeep of the property and staying current on property taxes and insurance. The lender must financially assess all reverse mortgage applicants to determine their ability to fulfill loan obligations. If it is determined that the borrower may not have the financial ability to stay current on home maintenance, taxes, and insurance, a portion of the reverse mortgage proceeds may be set aside to cover these costs.

Other Considerations

A few other things to keep in mind when applying for a reverse mortgage are:

• A current appraisal will be required.
• Reverse mortgage loan amounts are based on current interest rates.
• Closing costs can usually be financed in the reverse mortgage with no out-of-pocket costs to pay at closing.

Have Questions? Let Northwest Reverse Mortgage Help!

It may seem a bit daunting considering all the rules for qualifying for a reverse mortgage. That’s where Northwest Reverse Mortgage can help. Our reverse mortgage specialists can help you determine if you qualify and give you the best options for your circumstances. Contact us today to set up an appointment to get started!

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