Reverse Mortgage: What Are The Requirements?

Reverse mortgage loans are a way for American seniors to have access to their home equity, which they can use as another source of income when they retire. But, strict guidelines and rules were established and they need to be followed by all those who qualify for such mortgages, and the amount this type of loan could offer.

In case you are thinking of taking out reverse mortgage loans, you should have a good understanding of the basic rules that need to be followed.

Overview of Reverse Mortgages

Reverse mortgages are loans that are made to applicants who are at least 62 years old. This type of loan lets homeowners convert their home’s equity into tax-free money without the need to pay any monthly payment.

Reverse mortgage loans are named as such because the lender pays their borrowers instead of the borrowers paying the lenders, which is how it works with a traditional loan. 

The U.S. Department of Housing and UrbanDevelopment offers the most common type of reverse mortgages called Home Equity Conversation Mortgage. It is not a government loan but it is a type of loan that is backed by a part of the HUD or the Federal Housing Administration.

Reverse mortgages let the applicant borrow cash by placing their house as collateral. A bank provides the borrower with loan payments either as ongoing payments or as a lump sum according to a percentage of how much equity they’ve piled up in their house.

Reverse Mortgage: Requirements and Eligibility Guidelines

The homeowner must be at least 62 years old

The home you want to take out the reverse mortgage on should be your main residence

You should own a house or have a low balance on an existing mortgage if you apply for reverse mortgages in Columbia.

You should not be delinquent on federal debts

You should not have any problems setting aside a part of the loan funds at closing to cover things like insurance, property taxes, repair costs, and home maintenance.

Your home should be in good shape and should undergo counseling that is offered by a counseling agency that’s been approved by HUD. Through this, your eligibility will be checked and what are the consequences if you decide to take out such a loan.

For example, applying for reverse mortgage loans before retirement runs the risk of running out of cash later in their life when they will have lower income but their medical bills are higher.

Reverse Mortgage Fees

It’s crucial to remember that fees and interest rates are going to be added to your loan balance every month as a part of reverse mortgage loans. This implies that your debt will increase when you apply for this kind of loan because this is not free money. Apart from that, the borrower needs to pay homeowners insurance and property taxes. 

Call Reverse Mortgage Specialist if you need the help of a professional to determine if you are the best candidate for this type of loan.

David Stacey
Reverse Mortgage Specialist
Columbia, SC 29205
(803) 592-6010
http://reversemortgagecolumbiasc.com/