Reverse Mortgage Qualifications and Considerations

When you retire, you want the flexibility to do the things you love, but many of those things cost money. If your income is not what it once was when you were working, it can often be hard to fund your hobbies. You may even have trouble paying basic bills. If you own your own home, you have cash available to spend that you may not even know about. You can spend that cash by applying for a reverse mortgage. Here is more information about reverse mortgage considerations and qualifications.

Reasons to Get a Reverse Mortgage
There are many reasons to get a reverse mortgage, as opposed to a standard loan. For example, a reverse mortgage does not require you to pay your lender back on a set schedule, so you can avoid the stress of having an additional bill like you would have with a standard loan. Also, a reverse mortgage somewhat allows you to set your own terms because the agreement lasts for as long as you live in your house. Therefore, the loan period could potentially last many years, allowing you to have a financially comfortable retirement without the concern of missing mortgage payments.

Making Sure You Can Get a Reverse Mortgage Based on Your Home's Status
Owning a home is not enough to qualify for a reverse mortgage. There are certain stipulations that must be met. For example, you are required to live in the home attached to the mortgage. It has to be your main residence. It cannot simply be a property you own. If the home is actually an apartment building, it may still qualify. However, you must be the owner of the building and reside in it. In most cases, it also cannot have more than four apartments. No matter what type of home it is, a reverse mortgage calculator must determine the home has enough value to borrow against as well.

What a Reverse Mortgage Calculator Is
A reverse mortgage calculator is simply special tool capable of computing various calculations necessary to determine the worth of your home. It also helps you determine how much of that value is convertible into money you can borrow. The total value of the home is determined by many factors, such as its age. The total value you can borrow is also influenced by several factors, including government regulations that place restrictions on percentages that can be borrowed with reverse mortgages.

Making Sure You Personally Qualify for a Reverse Mortgage
Your home qualifying for a reverse mortgage is one thing, but you must also meet requirements to get a reverse loan. The reverse mortgage lender must see you as a good risk. That means you have to prove your ability to maintain the home, since you will remain its owner for the duration of the agreement, which may be many years. You do not have to pay the loan back fully as long as you keep living at the residence. To make sure you meet those requirements, a credit check may be requested. You must also meet the basic age requirement, which is that you must be at least 62 to qualify.

Choosing Where to Get a Reverse Mortgage
You can get a reverse mortgage from several sources. Many private institutions like banks and credit unions offer them. However, there are reverse mortgage scams you need to avoid. Therefore, when applying through a private lender, you must always choose one you can trust. Ideally, it should be an institution you have successfully done other business with in the past. Another alternative is you can get a reverse mortgage from a federal source, such as the Department of Housing and Urban Development. Such loans are called home equity conversion mortgages (HECMs). They are similar to standard reverse mortgages but offer additional government protections.

1 comment:

  1. Great read - wasn't aware of half off this