What You Need to Know When it Comes to Reverse Mortgage Eligibility

For most elderly people, a reverse mortgage is a highly helpful tool that allows them to utilize whatever equity they have been able to build up in their homes. Reverse mortgages have several requirements and it is a good first step to familiarize yourself with the basic requirements for eligibility. There may be some variations among lenders when it comes to the requirements but more of than not, they will be highly similar.

Before we continue, do you know how do reverse mortgages work?

One of the first and most basic requirements for a reverse mortgage is for the owner of the home to be 62 years of age or older. Having equity in the home is also a basic requirement. When the home is owned by more than one person, it is a necessary requirement that all parties be at least 62 years old in order to be eligible for a reverse mortgage. Reverse mortgages will allow individuals to borrow against their homes, even if the mortgage on them has not been fully paid off, however, a significant amount of equity must already have been put into the loan. It is also important to understand that the loan will hold first lien over the property. When a reverse mortgage is completed, all existing mortgages will have to be fully paid off. The funding that a person will get from a reverse mortgage will  provide money to pay off all existing obligations on the property.

Usually, reverse mortgages are loans which are completed on single-family residential homes, however, condominiums and other types of residences may be used to borrow against for a reverse mortgage. Aside from the eligibility of the home or type of structure, the borrower must actually reside in the property. As such, homes that are only used for vacations of homes that are rented are not eligible collateral for reverse mortgages.

Another requirement is that after everything has been facilitated with the reverse mortgage, the borrower must continue to occupy the home until the loan is fully paid off. The homeowner must also keep current all payments of taxes and fees on the property. Another thing that the owner must maintain is insurance on the home, keeping the property well maintained and managing repairs and other work that must be done on the home. In some cases, if the home is in need of repairs when the loan is being completed, some of the proceeds of the reverse mortgage may be earmarked in order to complete such needed repairs.

Would be borrowers should take not that while some mortgages will have some credit requirements, some do not. A good number of individuals find that reverse mortgage applications are easier to obtain than traditional quality ones. Where credit standing and other factors such as low income levels, bankruptcy, and other negative factors play a big role in traditional mortgages, reverse mortgage loans are not generally too impacted by such factors.