What Are the Borrower Requirements For a Reverse Mortgage?
Posted Under: Requirements
By R W Taylor
The borrower requirements to obtain a reverse mortgage are that the youngest borrower must be at least 62 years of age and the property must be the primary residence. The property must be owned free and clear of any debt, or at least have a relatively small mortgage balance. There are reverse mortgage calculators available online which provide required equity ratios based upon the attained age of the youngest borrower so that you may quickly be able to tell if you qualify simply from the amount of equity you have in the home.
The dollar amount of a reverse mortgage is based upon the lessor of the appraised value or in the case of a federally insured HECM (home equity conversion mortgage) it could not exceed the mortgage limit of the area in which the property is located. The appraised value will be determined by an FHA approved appraiser in the area, and will be based primarily upon very recent sales of very similar properties in the same immediate neighborhood. The appraisal will be ordered by the lender as part of an actual application process so, while you may have a general idea of home values in your immediate neighborhood, the actual amount of a reverse mortgage which would be made available will not be known until the completion of the “FHA Appraisal”.
The property requirements are that your home be a single family home (which includes a HUD-approved condominium) or a 1-4 unit building with one of the units occupied by you as your primary residence. Manufactured homes that meet FHA requirements also qualify.
With respect to financial requirements of the borrowers, there are none. There are no credit qualifications, no income qualifications and no repayment of the reverse mortgage as long as the property remains your principal residence. The closing costs may even be financed into the mortgage.
Of course, while all of this sounds simple and easy, there are many disadvantages of reverse mortgages and all aspects of this type of financing must be taken into consideration as a part of long term retirement planning.
Want more information about Reverse Mortgages?
Find out how to get the best Reverse Mortgage rates.
http://www.prosandconsofreversemortgage.com is a free resource for anyone looking for a Reverse Mortgage or looking to learn more about mortgage loans in general.
Photo by chb1848
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