Who is eligible to apply for a reverse mortgage loan?
The most popular reverse mortgage loan is a Home Equity Conversion Mortgage (HECM), a particular kind of mortgage offered to homeowners aged 62 and over.
Other conditions for reverse mortgages besides age include:
Your house must be your primary residence, which means you spend most of the year there.
You must either own your property outright or have low mortgage debt. You no longer have a mortgage on your home if you own it outright. If you still owe on a mortgage, you must be able to pay it off when the reverse mortgage closes. You can use your money or money from a reverse mortgage to pay off your existing mortgage balance.
You cannot have any federal debts, such as federal student loans or income taxes. However, you are permitted to pay off this obligation with funds from the reverse mortgage loan.
You must have enough of your own money or agree to set aside some of the reverse mortgage funds at your loan closing to cover recurring property expenses, including taxes and insurance, as well as maintenance and repair expenditures.
Your house must be in decent condition. The lender will let you know what modifications are necessary before you can apply for a reverse mortgage loan if your home does not meet the acceptable property criteria.
To explore your eligibility, the financial ramifications of the loan, and other options, you must undergo counseling from a reverse mortgage counseling agency like Giraffe Lending, which HUD has approved.
https://www.giraffelending.com/reverse-mortgage-loan-san-francisco
Most adults have heard of reverse mortgages, but many are unsure of what these loans mean and how they work.What Is a Reverse Mortgage?In a nutshell, these loans are outstanding loans intended for people over the age of 62 to have access to equity in their homes.
This type of loan is especially desirable to people who want, or need, to supplement their pension funds.How Does A Reverse Mortgage Purchase Loan Work?A reverse mortgage purchase loan works by first using part of the home equity to repay an existing residential mortgage - that is, if it still has a mortgage.The homeowner is not required to pay the loan monthly for the reverse mortgage, as the loan balance falls due until the final borrower leaves the house, passes away, failure to pays taxes or insurance, or neglects house maintenance.Although they are not required to make month-to-month payments, doing so could decrease the regular monthly interest or prevent it from accruing entirely.
If they decide not to make a month-to-month payment on the loan, interest for that month will get added to the total loan balance.After paying off the existing mortgage, the reverse mortgage purchase loan lender will pay any proceeds that are left from the new loan.
The homeowner gets to choose how to receive the funds.Types of reverse mortgage purchase loans: Home Equity Conversion Mortgages (HECMs)HECMs are insured by the federal government and make up more than 90% of all reverse mortgages purchase loans.Eligible residences include properties with one to four units, as well as approved manufactured homes, apartments, and co-ops.Proprietary loans: Private institutions fund proprietary loansSingle-purpose loans: Non-profit and other organizations fund single-purpose loans.
As the name suggests, single-purpose loans must be used for a specific purpose, which the provider typically dictates.
Currently, loans that are subject to proprietary or single-purpose loans are rarely given to borrowers.Who Is Eligible For A Reverse Mortgage Purchase Loan?To be eligible for a reverse mortgage purchase loan, the homeowner must meet at least the following criteria:Must be 62 years of age or older.Must have adequate equity in the home – about 50%, but the amount required varies depending on the lender.Must participate in a counseling session from a Department of Housing and Urban Development-approved counselor.Must go through a financial assessment.In addition to these requirements, the house also needs to qualify for the loan.
