There are simple requirements to be eligible for a reverse mortgage. although the process can sometimes be daunting, there are often experts that can guide and make the reverse mortgage process easier to bear. To be eligible for a reverse mortgage, Federal Housing Administration generally requires that the homeowner is 62 years of age or older, has a very low outstanding mortgage balance or owns the home free and clear.
Some people question their eligibility if the original purchase was not FHA-insured, or if they live in a condo rather than a house. It is still possible to qualify for a reverse mortgage in either case. An eligible property must be the principal place of residence, and a one- to four-unit dwelling with at least one unit occupied by the borrower. This includes condos and single-family houses. Those living in a mobile home can also qualify for the reverse mortgage. The property itself must meet minimum property standards, but the funds to repair anything can be drawn from the reverse mortgage.
A reverse mortgage works differently than a home equity loan or a traditional second mortgage. With a home equity loan, there must be sufficient income to qualify for the loan, and the borrower is required to make monthly payments. On the other hand, a reverse mortgage pays the borrower, and is available regardless of income. There are no monthly payments because the home loan is not due as long as the borrower occupies the space. Like all home owners, there is still the requirement to pay real estate taxes ad other utilities. With a reverse mortgage, it is highly doubtful the borrower will be foreclosed or forced to vacate because of missing a mortgage payment.
When looking around for a reverse mortgage, make sure to look for the low mortgage rate and consider the options between a reverse mortgage and a home equity loan. There is no doubt that a home with equity can give the homeowner money in their pocket, but finding the means to get the most there will be tricky. Many times people do not shop around or consider their individual financial situations, and end up with a reverse mortgage that costs money.
Knowing how much money will come out of a reverse mortgage will depend on several factors. In general the maximum amount of money that can be received depends on such factors like the age of the borrowers, the appraised value of the property, or the mortgage amount for the area. Depending on current interest rates, a 65-year old could borrow up to 26 percent, a 75-year old could borrow as much as 39 percent, and an 85 year old could borrow 56 percent.
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By: Groshan Fabiola