Reverse Mortgage Qualifications
A reverse mortgage is a type of loan that allows for you, a homeowner, to convert some of your home’s equity into cash. Like any type of loan, there are qualifications that you’re expected to meet in order to be able to apply for a reverse mortgage.
Reverse Mortgage Age: Your age is a determining factor in whether or not you can apply for a reverse mortgage. You must be 62 years of age or older. Your age can also determine how much you are able to borrow. Generally, the younger you are, the less money you will receive. Inversely, the older you are, the more you will receive.
Ownership of Your Home also affects whether or not you can qualify for a reverse mortgage. To qualify, you must own your home, and it must be your primary residence. You also must have a substantial amount of equity in your home.
Reverse Mortgage Counseling is required before you can apply for a reverse mortgage. This must be with a counseling agency that is approved by HUD. This is so that you, as a homeowner, understand all your options regarding this type of loan. There are reverse mortgage pros and cons. With reverse mortgage counseling, The Department of Housing and Urban Development (HUD) ensures that you are presented with the proper reverse mortgage facts. It is important that you understand the costs, the benefits and the consequences before your reverse mortgage funding.
Find HUD approved reverse mortgage counselors here.
Why Don’t I Qualify for a Reverse Mortgage?
While the equity in your home is looked at when applying for a reverse mortgage, your credit score is also considered. Bad credit history can negatively affect your eligibility.
Your current mortgage can also affect your eligibility. Your mortgage balance must be low enough that it can be paid off by the proceeds of your reverse mortgage funding, assuming you do not own your home outright. You also must keep up with all property expenses and maintenance.
There are also types of homes that do not qualify for a reverse mortgage. There are specific rules for condominiums and manufactured homes. To find out whether or not your condominium qualifies for a reverse mortgage, click here. If your manufactured home does not meet all the requirements, it will not qualify. Second homes or vacation homes, Co-ops, mobile homes, and multi-family homes of more than 4 units do not qualify.
The condition of your home can prevent you from qualifying for a reverse mortgage. FHA has property requirements that must be met, including safety and upkeep of your home. Home repairs will be required before being approved for a reverse mortgage if there are issues with accessing the home safely or if there are issues in the upkeep of your home.