What You Need to Know about Reverse Mortgage Requirements
Do you want to know how to qualify for reverse mortgage
? You must be at least 62 years old and you have to own your home. It is easy to meet the requirements of this type of mortgage loan.
When you get a reverse mortgage, you will be able to convert the equity of your home into cash. You will have several options on how you receive the payments. You can choose a lump sum payment, a monthly check, or a credit line. But why would you want to convert your equity?
For one thing, a reverse mortgage is a viable financial strategy when you retire. It could be your only source of income. This type of loan is called reverse because the flow of payment has been reversed. Instead of building the equity to your home by paying the mortgage, you will reduce the equity by taking cash out through the reverse payment method. Besides, you already saved enough equity over the years. You can easily access these savings by getting a reverse mortgage loan.
Technicalities of Reverse Mortgage
The fees and charges involved when you take out a reverse mortgage would be similar other types of loans. You will have to pay a corresponding originator fee, title fees, escrow, appraisal fee, recording charges, and ongoing service fees. In case you have substantial equity to your home, then all the fees and charges can be bundled into the loan.
You will not make any payment on reverse mortgage loan. It is a different matter though if you move or if you sell the house. If you transfer to another home and the mortgaged property is not your permanent residence anymore, then payments will become due. The loan will become due also once you sell it. You have to take note that the loan balance will never be allowed to exceed the actual market value of your home.
Eligibility Requirements for Reverse Mortgage
There are several amazing things that you have to know about reverse mortgage. When you apply for this type of loan, your credit history will never affect your eligibility. There is no need for you to produce an income statement and bankruptcy records. The state of your health will also not affect your chances of getting an approval.
A lot of people are asking how lenders can determine the value of the equity. There are three specific factors that determine the value of your equity. The first factor is the age of the youngest borrower. Second, the official appraisal of your home; and lastly, the standard
FHA maximum loan limit in your area.
The government ensures that you will enter into a reverse mortgage agreement with your eyes fully open. This is the reason why it is required for borrowers to take counseling before they can sign the loan contract. The counselors should be accredited and approved by the Department of Housing and Urban Development.
You can not sign a reverse mortgage contract without counseling. This service can be provided for free or for a very small fee. Just make sure that the counselor is not working for the lender.
What You Need to Know about Reverse Mortgage Requirements
By: Rob Blake
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